Prediction: Apple, Google Finally Launching Subscription Services Will Be A Game-Changer - hypebot

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JC

David,

How would the economics work between device maker (Apple) and Rights Holders under a model where the service was bundled with the device? Wouldn't the device maker be forced to payout to the rights holder every month while collecting from the consumer only one time up front? Won't that create challenges to this model?

Seems more likely that the carriers (AT&T, Verizon) would bundle the service with their service, so that the payouts to rights holder match the subscription income from the customer. Think about Muve Music success story.

Interested in your thoughts.

Shadesofsolveig

I think David is right spot on. This is a waiting game and the infrastructure players can afford to sit back and let the VCs spend their money trying out different interfaces and subscription models, and when the money is gone, they will scoop up the best technology and either use it or kill it. It's hard to see Google challenging Apple successfully on streaming music - they have the existing huge paying customer installed base with iTunes, they know mobile customers well, they know tablets, they have great software engineers.
Unless they are thwarted by the labels through overly onerous licensing structures, it's their race to lose.

pete

Apple or Samsung can include their streaming apps on all devices with no financial costs but to bundle it would need the network operatorsif you define bundle as download costs free as part of your deal.

One problem For me - Streaming would have a negative revenue impact on their download businesses so why would they push streaming?

Theoretically a game changer but many open issues still

Yannick, the GeneralEclectic

When analyzing the whole stream subscription model, experts always seem to overlook the role of the internet access providers. Over here in Germany, the largest IAP, Telekom, has threatened/been rumored to change all the flatrate contracts with their clients into download-on-demand at an unspecified date in the not-so-far future because with as many heavy users on flatrates, the IAP's calculations for the flat rate prices don't add up to a profit anymore.

And who in their right mind would pay the difference between the flatrate and the megabyte-on-demand price merely for entertainment purposes?

I still believe in physical ownership of recordings because this way, I don't need a middle man to get access to "my" content.

David Dufresne

Hey Jed,

I'm no expert, but I assume the economics would be similar to the deals that rights holders have in place with Spotify and others, and based on pay per stream fees, independent of wether the service is free, freemium or paid. The main difference is that the app would be pre-installed (part of the iPod feature) and iTunes or Play users automatically signed up.

Maybe in Android's case some carriers would bundle a monthly sub. You're right that maybe in that situation the deal with rights holders would be different. I'm surprised we haven't seen more packages like Muve Music, so I don't know if it's a success story for all stakeholders.

David Dufresne

"One problem For me - Streaming would have a negative revenue impact on their download businesses so why would they push streaming?"

True and that's definitely one main reason why we haven't seen it yet. Solveig's comment above says it. Apple is being patient and will launch a service once it sees that there's risk of a critical mass leaving the "iTunes-iDevice" for Spotify and others, and impacting their download sales revenues and competitive position. Google is nowhere near that position, but it's Google... and Android.

David Dufresne

That said... Youtube = Google, so maybe Google can be somewhere near that position...

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