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More iTunes alternatives: Can a subscription music service ever succeed?

By | December 10, 2010, 5:00am PST

Summary: They’ve been around for nearly a decade, but subscription music services like Rhapsody and Napster have never taken off, and even Microsoft has struggled with its Zune Pass. What’s the problem? I take a closer look at all three services.

If you use a subscription-based music service, you probably love it. You are also, like me, a member of one of the world’s smallest cults.

In economic terms, the proposition is an obvious bargain: A music service that allows you to listen to any track or album from a selection of 10 million or more, any time you want, for a low fixed monthly price? In theory, that should be irresistible (I used that exact wordin a 2008 post). And yet the music-loving public has basically snubbed services that offer this capability. I suspect the iTunes Store does more business on a slow day than most of these services do in a year.

Why haven’t subscription music services succeeded? What’s the likelihood that one will finally break out next year? Will Apple charge into this space and take it over?

In this post, which follows up on my earlier look at alternatives to the iTunes store, I look at the three biggest and most well-established subscription music services in the United States: Rhapsody, Napster, and Microsoft’s Zune Pass. (You’ll find details about each service on <the next page.)

At least one big name didn’t make it to my list: Spotify, which my friends in the UK swear by, is not included because it’s unavailable in the United States. I also left out two relatively new services that are still too new for me to do more than watch with interest: MOG and Rdio. I’ll make sure they’re on the list for the next installment.

(And before you ask: No, Pandora and similar services aren’t included here either. My definition of the category includes any service that allows subscribers to log in and play single tracks or complete albums from the service’s collection in a web browser or on a supported mobile device. Pandora allows you to influence but not pick your own playlist, and it sets limits on how many tracks you can skip.)


Share your opinion on the digital-music industry, win a Zune HD
Why haven’t subscription music services taken off? There are several huge hurdles for music consumers to get past. One, obviously, is financial: in this economy, people cringe at the thought of yet another monthly obligation, even if it is “just a few bucks.” Logistically, using a subscription music service involves technical hassles like downloading a custom app for mobile access, which adds just enough friction to discourage casual use. Conceptually, a lot of consumers have trouble understanding how the service works and how it differs from iTunes. (Reading through the customer support forums at Rhapsody was a particularly painful experience.)

But there’s one objection that trumps them all: None of the current crop of subscription services integrates smoothly with an iPod or iPhone. What good is an “unlimited” music subscription that doesn’t follow you outside the house?

With the Zune Pass, Microsoft is trying to route around the iOS hegemony by creating its own hardware ecosystem, with dismal results so far. Meanwhile, the other services have settled on a similar technology template: for listening on a PC or a Mac, a browser-based music catalog with a pop-out player; for mobile use, iPhone, iPod Touch, and Android apps that allow you to stream from a mobile device and save tracks for offline play if the subscription level supports it.

The Rhapsody and Napster mobile apps work, but they keep your subscription tunes in one app, completely separate from the library containing music you own. That means there’s no way to create a playlist that mixes tunes from both locations. You have to switch apps.

Page 2: Subscription services at a glance –>

Ed Bott is an award-winning technology writer with more than two decades' experience writing for mainstream media outlets and online publications.

Disclosure

Ed Bott

Ed Bott is a freelance technical journalist and book author. All work that Ed does is on a contractual basis.

Since 1994, Ed has written more than 25 books about Microsoft Windows and Office. Along with various co-authors, Ed is completely responsible for the content of the books he writes. As a key part of his contractual relationship with publishers, he gives them permission to print and distribute the content he writes and to pay him a royalty based on the actual sales of those books. Ed's books written prior to fall 2011 have been distributed by Que Publishing (a division of Pearson Education) and by Microsoft Press. As of November 2011, Ed is a partner in the independent publishing company Fair Trade Digital Exchange, which exclusively publishes his books.

On occasion, Ed accepts consulting assignments. In recent years, he has worked as an expert witness in cases where his experience and knowledge of Microsoft and Microsoft Windows have been useful. In each such case, his compensation is on an hourly basis, and he is hired as a witness, not an advocate.

Ed does not own stock or have any other financial interest in Microsoft or any other software company. He owns 500 shares of stock in EMC Corporation, which was purchased before the company's acquisition of VMware. In addition, he owns 350 shares of stock in Intel Corporation, purchased more than two years ago. All stocks are held in retirement accounts for long-term growth.

Ed does not accept gifts from companies he covers. All hardware products he writes about are purchased with his own funds or are review units covered under formal loan agreements and are returned after the review is complete.

Biography

Ed Bott

Ed Bott is an award-winning technology writer with more than two decades' experience writing for mainstream media outlets and online publications. He's served as editor of the U.S. edition of PC Computing and managing editor of PC World; both publications had monthly paid circulation in excess of 1 million during his tenure. He is the author of more than 25 books on Microsoft Windows and Office, including the recently released Windows 7 Inside Out.

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RE: More iTunes alternatives: Can a subscription music service ever succeed?
NPGMBR 4th Jan 2011
@20kwfence

Kinda hard to understand the logic on this one!
I really love subscription music services too. I've discovered more great music in the years I've been using them than I ever had before. I even go so far as to have a few of them active at once and enjoy comparing library and feature differences between them.

In my experience the Android apps are very close to the iOS versions in functionality. Some apps will vary somewhat in appearance but the feature sets and quality are usually quite consistent. Every once in a while one version will get a particular neat new feature early, but they eventually equalize. Right now all the versions are pretty much 'in sync'.

I've even started a blog, http://cloudmusic.tumblr.com about these since I'm such a fan. I haven't really put out any reviews of each service yet, but am planning to in the near future now that most of them have stabilized.

Thanks for the great article!
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Contributr
Nice blog
Ed Bott 10th Dec 2010
@ed_yasi@...

Thanks for sharing that link!
h t t p : / / 0 8 4 5 . c o m / 1 o 3

I tide fashion
why would anyone pay for music when u can rip an mp3 off of youtube? I mean the music industry doesn't realize this yet due to major incompetence. simply amazing how dumb people are.
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800 lb. Gorrila
NoAxToGrind 10th Dec 2010
Peer to peer.
@NoAxToGrind i agree, people are still pirating, and its free, so why pay for a subscription when you can get it that way
@nickdangerthirdi@... I was a former pirate but started using Zune Pass. Simple. It's easier. I don't have to find the torrent, download it, copy the files, delete the torrent. Granted, that takes 5 minutes. But now, I don't even have to put in the 5 minutes. It takes me 0 minutes so saving an hour a month on dealing with my torrent collect is worth $15 to me. Additionally, you can't pirate a song when you are away from your PC, subscription lets you listen to that song instantly via streaming.
@jhottes...

You missed something - with a sub service, you don't really get to keep the music. Sure, Zune Pass will give you x number of songs a month you can keep, but if you like x-plus-one songs, you can only keep 'em for as long as you're paying the monthly sub fee.

Personally, it would be easier to use Pandora (free), and the songs you really like you can go buy from Amazon or whatnot later.
@nickdangerthirdi@... so why pay for a subscription when you can get it that way

Because if you get caught, you'll bancrupted and possibly incarcerated.

No amount of "Free" music is worth that much.
@Ranom_Walk: Sorry, but you missed the point:

With Zune, you get to download as much music as you like each month. And you get to download and keep (in perpituity) up to 10 tracks per month. Want more than those 10 tracks per month? Either split your purchase over multiple months or buy the tracks outright as you would anyhow.

The point being that rather than buying EVERY track you want to listen to, you get to listen to as much music as you like and keep the stuff that really matters for a ridiculously low price.

I used to buy 2-3 CD's per month. At ~ $12 per CD, that's $24 per month for CD's which I only used to listen to perhaps 30% of on average. I then started buying tracks online ... but found that, long-term, I didn't like many of them as much as I thought I would.

Now, I've been a Zune subscriber for some time, I download and listen to as much music as I like, enjoying a FAR broader range of music while I am at it, and download my top 10 most listened to tracks and albums from the last few months.

My "owned" music collection is now FAR better than ever before.
@bitcrazed:

There's some rather ugly holes in your arguments. Allow me to point 'em out in turn:

"With Zune, you get to download as much music as you like each month."

With Pandora (or Spotify, last.fm, etc), I can listen to as much music as I like, and pay $0.00 to hear them, which is what you're basically doing for the majority of your chosen songs, since you do not own them. No downloading it into some hard-drive-eating DRM-locked vault, either. wink

"Want more than those 10 tracks per month? Either split your purchase over multiple months or buy the tracks outright as you would anyhow."

...and it costs, what, $15 per month, right? Comes to $1.50 per non-DRM-locked song. Amazon and iTMS sells 'em on average for 33% less.

"I used to buy 2-3 CD's per month."

Strawman argument. Nobody said anything about buying physical media here, and physical vs. digital media isn't the point.
no need for peer to peer when youtube is giving u free music.
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But the artist get screwed.
robshelby@... 10th Dec 2010
Artists make significantly less money when you stream their music through cloud services compared to when you pay for a download or buy a physical album...

I love streaming music services, but I will not use them until it's fair for the artist.
@robshelby@... Does that mean you don't listen to the radio? Ever drop a coin in a jukebox?

In any case, just because you buy a download does not mean that the artist gets compensated. There is a reason why so many artists end up suing the distributors to get a proper accounting.

Now a completely independent band which has real control is a different animal.
@richard233 I really don't listen to the radio.

I'm not sure what you are arguing? Your points are correct, but off topic. The average percentage of profit that an artist gets from a subscription service is far less than a digital download, which is far less than a physical sale. Even independent artists are not fairly compensated in a subscription service. Many smaller labels even had to cancel contracts with eMusic because they were losing too much money.

@qbt Apple's service is probably for movies and music. That's what they are using Lala's code for. I think subscription services are far more popular than you may think? Almost everyone I know in the UK has a spotify account. A large handful of friends in the states have a Mog account. It's not the artists that are signing the contracts, it is the labels.
@richard233

FYI,
ASCAP and BMI track the radio stations' playlists to collect royalties for their artists.
@robshelby@...

If a subscription service is legit, it means that the artists have agreed to allow their music to be available on the service. However I also feel that since subscription services are not very common, that artists feel ok to give end users such a deal. If they ever do become popular, then the artists might balk. This might be why Apple can't get a subscription service for iTunes. We know they are trying though:

http://www.engadget.com/2010/10/08/apple-in-talks-to-launch-itunes-subscription-music-service/

And of course if they ever do get a subscription service, I'm sure that suddenly it would be the hot new thing, well, because Steve says it is...

Bottom line - as long as subscription services are not very popular, those of us without blinders on get the benefits of such a service (once again, not talking about streaming services like Sirius/XM, but full-featured services like Zune Pass that have all of iTune's features plus features that iTunes cannot provide).
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@Qbt
thing I won't be using it, nor will I suddenly see a value in it for I don't. I just don't want another monthly bill, no power bill, no cable bill, no medicine bill each and every month. The list goes on and on and on. I'm sure if they can pass a law I'd get a monthly "air" bill as well. So as a rule I reject the monthly service as often as I can. I can see business loving it for to have a steady and reliable income month after month after month MUST be sweet but to me if I spend a buck and get something that I will NEVER have to pay for again I"m much better off and no I'm not into sampling and or searching for new music too much like shopping and I'm soooo not into that. Oh and just so you know I'm a huge Apple fan but I don't own an iPad either cause I still can't find a use for it in my life nor a need.

Pagan jim
@James Quinn
I tend to agree. I know some people may prefer the monthly-fee plan, but it's definitely not for me.
I honestly have been so busy that I have not downloaded a song in almost a year. My mind has just been on other things, but I still listen to current collection constantly while I am working/ cycling/ driving etc.. I would hate to have to pay month after month for no services rendered.

Plus, I guess I would feel that if I ever decided to change to a different service then I would be afraid that most of my music collection would vanish.

Subscription seems like it is best for people that don't already have a vest music selection and are satisfied with sticking with the same service forever (even if something better comes along.)
dont listen to their music on youtube either cuz everytime u do u are downloading an mp3 son.
I look at the three biggest and most well-established subscription music services in the United States: Rhapsody, Napster, and Microsoft?s Zune Pass.

That is fine but these 3 have not succeeded for one reason: bad reputation. Naptster would let you share music for free until they got busted. I think the legal action against them turned people away. Rhapsody, well that is from Real who have had their reputation tarnished by their realplayer. Pretty much no one uses their products anymore. And the last is Microsoft, they get a bad rep from just from being a large company by the anti-MS people.
@Loverock Davidson well rather than bash those three, how about offering up some successful other ones....
@nickdangerthirdi@...
Well, technically speaking, he already mentioned the Zune Marketplace when he made that post. If he were to say it again as a successful service over iTunes, he'd just be contradicting himself. Basically, Loverboy shot himself in the foot here.

Unless he can think of another service without focusing solely on it's flaws and admit MS messed up, I doubt we'll get much.
@Loverock Davidson If the customer has an XBox or a WP7, and they love their product, the "anti-MS"enesss dissapears. Microsoft should continue to bring on good to excellent products and then the other things will take care of themselves.
don't like the idea that some company will come in and pull it off their machine if they don't pay up every month. It brings up images of a guy named Guido holding a big stick. It really is no more complicated than that.
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very true...
doctorSpoc 10th Dec 2010
@frgough.. probably the majority of people dismiss subscription right out of hand for this reason.. if i want to just listen to music with out purchasing it i can just play broadcast radio or internet radio.. why would anyone pay for that?
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@doctorSpoc

Pagan jim
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Because I care what music I listen to...
steve_jonesuk@... 10th Dec 2010
...and I want to choose it myself.
@steve_jonesuk@... most people want to passively discover music.. to most.. actively discovering music is work.. i think most go through a short phase like that.. but it passes..
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Active / Passive Discovery
steve_jonesuk@... 13th Dec 2010
@doctorSpoc I mainly discover music by listening to radio; but when I want to listen to tracks I already know I like, I listen to Spotify.
@frgough "own": one word, that's the issue that Ed missed completely right there. And not just "feel like they own" -- actually and irrevocably own.
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Contributr
Missed completely?
Ed Bott Updated - 10th Dec 2010
@Bruce Walker

Sheesh, I wrote 3000 words on the subject of owning digital music earlier this week in the first part of this series.

You must have missed it. Here:

http://www.zdnet.com/blog/bott/itunes-alternatives-how-do-amazon-and-other-digital-music-services-compare/2750
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Contributr
Missed completely?
Ed Bott 10th Dec 2010
@Bruce Walker

I wrote nearly 3000 words on the subject of "owning" digital music earlier this week, in the first part of this series. You must have missed it:

http://www.zdnet.com/blog/bott/itunes-alternatives-how-do-amazon-and-other-digital-music-services-compare/2750
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You NEVER "own" the music
Qbt Updated - 10th Dec 2010
@Bruce Walker

You simply own the right to play it. As in, try to sell that song as if it is your own. Well, if you truly owned it, you would be able to do that, right?

The difference between a subscription and "owning" music is simply a slightly more generous license. Since I can play my subscription music anywhere I care to play it, there is absolutely no downside to not "owning" the music for me. The fact that I can listen to any song at any time without having to deal with crippled 30 second clips (or 90-second - whoop-de-freakin-doo) is another huge advantage.

In addition, I do get to "own" 10 DRM-free songs every month on Zune Pass.
@ Qbt.. if you purchase the music outright.. you're done paying and you can play it, you can pass it on to your friends of family etc.. it doesn't have a self destruction clock build into it...

for zune pass you can keep 10 songs a month, but are their really 10 songs a month that you really want taking up your hard drive space? i'm pretty discriminating when it comes to music i pay for and i have a huge music library that i've amassed over many years.. i only add pretty special songs to that collection and 10 of those don't come along ever month.. if i was building a collection then it might be quite useful though
@doctorSpoc

Wow, are you really that uninformed about how music purchases work, and what it means to "own" music?

If you pay for a song on iTunes, you certainly don't have the right to freely give it to friends and family. You might be able to share that song on multiple devices, but certainly not give it freely to friends and family. Go read the license you agreed to when you signed on.

And you really don't have to use your 10 song credits per month on Zune Pass if you don't want to.
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@ Qbt
@doctorSpoc

" Can you use your 10 songs the next month"

Sorry, I don't understand your question. If you mean, can I use the 10 DRM-free songs I downloaded this month the next month, even if I stop paying, then yes, I can.

If you mean, do the 10 song credits roll over to the next month if I don't use them this month, then no, they don't. You have to use them or lose them.
Good question you never answered. Do you have "roll over songs" in AT&T speak for those songs you do not "buy".
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Bruizer
Mister Spock 11th Dec 2010
If reading your question, and Qbt's response, those songs you do not purchase are there every month until you cancel your subscription or remove them.

The 10 credits do not roll over (so as to give you 20 songs the following month), so I myself just purchase some of the tracks I have subscribed to when I do not see any new music that I enjoy.
plain
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Sort of like your rent?
John Zern 10th Dec 2010
That's why I don't understand people who rent apartments: You miss a month and a guy named Guido holding a big stick throws you out on the street. It's really is no more complicated than that, so I just don't understand it at all. wink
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I agree.
Mister Spock 10th Dec 2010
I see no value in renting an apartment when purchasing would be a much smarter choice.
plain
Nearly everyone wants to own. They rent because they can't afford to own right now.
@frgough you are right. as we move to the cloud the way people think has to gradually change. ownership is still ingrained in our perception of what it means to have something. the internet is changing everything about us and progress is slow and steady.
@frgough
"People want to feel like they own their music"
Brings up images of Scrooge McDuck sitting in his vault letting his gold coins run through his fingers. He never got the idea of money and most like you don't have an idea about what music is for. Music is to be listened to. Doesn't do you any good if you don't listen which is what I want. Listen to what i want, when I want and that is what I can do with the zune pass. Pay annually and for 12.50 per month I get 10 songs and can listen to tens of thousands. that works out to owning 10 songs per month for $10 and listening to anything I want for $2.50 per month. Take your average itunes purchaser. For $120 per year he gets 120 songs. that's it. For $150 per year I get 120 songs and can listen to anything. why is that such a strange concept for someone to get his head around?
@frgough
"People want to feel like they own their music"
Brings up images of Scrooge McDuck sitting in his vault letting his gold coins run through his fingers. He never got the idea of money and most like you don't have an idea about what music is for. Music is to be listened to. Doesn't do you any good if you don't listen which is what I want. Listen to what i want, when I want and that is what I can do with the zune pass. Pay annually and for 12.50 per month I get 10 songs and can listen to tens of thousands. that works out to owning 10 songs per month for $10 and listening to anything I want for $2.50 per month. Take your average itunes purchaser. For $120 per year he gets 120 songs. that's it. For $150 per year I get 120 songs and can listen to anything. why is that such a strange concept for someone to get his head around?
letting you into his vault to run your fingers through HIS coins, as long as you pay him. The moment you quit paying him, he kick you out of his vault and locks it.
@johnnylumber

While I agree with your $120 vs. $150 arguement, I don't listen to music that much anymore, most of what has been recorded in the last 4 years is trash not worth listening to, and of what was recorded before then I already own most of the songs I like. So in my case I don't listen to enough music to receive an adequate RoI (Return on Investment) for the purchase to make sense financially. 10 years ago, I would have gotten a Zune Pass, instead I wasted my money buying CDs every week, most of which I have lost, given away, sold, or they just don't play anymore. At some point I had 700+ CDs, now I own about 6 and I could not even tell you where they are right now. About 30%-40% of my music lives on saved to my HDD, but I'll tell you I have not listened to 50 tracks in the last 4 years combined. I do occasionally enjoy using Pandora, maybe 4 or 5 days in a row I'll listen 4+ hours a day, but then I'll forget about it and not log in again for 1 or 7 months at a time. My car stereo has not been turned on since 2009 when I bought an audio book on CD... (unless of course my wife used it when she drove my car instead of hers to go somewhere).

My wife however still buys 4 or 5 CD's a year, but I have gotten her to start buying MP3s instead now, and she might get 4-6 songs every 2 months at this point.

So in the end, for some people, it is just not worth it. No matter how good an arguement you make. (I also hate the idea of having to pay something else every month, I have not had a car payment since march 2008, because I can't stand the thought of it, even though my 2000 mustang has started falling apart now)
@frgough - FWIW, nobody comes along and "pulls [the music] off their machine" - subscription music stays on your machine, but can no longer be played because your license expires.

And, FWIW, it's almost never the service that removes content - 99% of the time it's the content owner (artist/label) who may discontinue a particular album and may in fact have replaced said album with a more recent version.

The services are very much at the mercy of the content owners' control over the rights to their content.

Now, of course, if you were a Zune subscriber and had permanently downloaded your 10 tracks per month, or had purchased any tracks outright, then you don't need a license to play them and don't have to pay to play them in the future.
@20kwfence

Kinda hard to understand the logic on this one!

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