One of the big stories to come out of Macworld last week was the announcement that Apple was going to start offering movie rentals thru it’s exceedingly popular and amazingly cool iTunes store, but the lesser told story was the reaction from record company executives who have been salivating for a music subscription (rental) service that might actually work, but what these recording industry bigwigs can’t seem to comprehend, and in the words of Steve himself, “People want to own their music, not rent it.” – and I couldn’t agree more.

I’m going to stroke the hair of my geekygirl-AppleFangirl self and share some of my thoughts on why music subscription services haven’t ignited the imagination of the music listening public the way iTunes and the iPod have.

Every few months it seems, cyberia becomes littered with news articles proclaiming that the next iTunes killer has arrived which is going to solve every lament the record companies have over DRM, piracy, falling sales figures, and how to escape out from under Steve Jobs’ apparent iron grip on the digital end of the music industry. Usually it’s some announcement that a new ‘service’ is being introduced by previous competitors in the business which have now teemed up to try and fix something that really isn’t broken. But in their eyes, anything other than complete and total control of a listener’s music from conception to the last note of the last track will ever be acceptable, and the reason the industry has this attitude is because of years of dealing with unregulated distribution and unmitigated piracy of content, and now they want some payback. Piracy and falling sales are real concerns, but music subscription services aren’t the answer.

The real problem is that the recording industry was way behind the curve when the music loving public discovered the MP3, and the industry’s immediate reaction was to try and shut it off at the source, and at the time the biggest spigot on the piracy front was Microsoft given that Windows is the predominant installed base operating system and with free P2P software coupled with easy MP3 encoding of CDs and high speed data pipelines, Napster quickly became a household name. So the industry pressured Microsoft to disable support for MP3 files, and the initial betas of Windows XP didn’t support the format – but in the face of out and out rebellion from users, support for the format, much to the chagrin of the music industry, was put back in and has remained with us ever since. As a sidenote – Microsoft was pushing its own restricted DRM heavy WMA format, perhaps envisioning its own version of iTunes before Apple beat them to the punch while the unrepentant Rip - Mix - Burn flag was flying high over Cupertino. History lessons aside, Apple was able to predict the future and the iPod was born, soon to be followed by little sister iTunes. You don’t need a weatherman to know which way the wind blows as Bob Dylan says.

So fast forward to 2008 and Apple has sold over 4 BN songs thru iTunes, but the record industry still isn’t happy. CD sales continue to fall, and we still have rampant piracy despite the often absurd and self defeating heavy handed antics of the RIAA, so the real question is why don’t the record companies just go all in with iTunes and work on ways to get more music into listener’s hands? Why is there an automatic assumption that every music consumer will immediately turn into a file sharing pirate if DRM is removed and more content is available for them to purchase and enjoy? Some of that can be answered in that Apple has resisted multiple pricing arrangements with the record companies, but that’s starting to change. Anyone who has ever entered a record store has looked thru the bargain bin only to be delighted to find some old record they’ve long since forgotten about and are more than willing to pay $7.99 to buy it, and now iTunes is offering many older albums at a discount – so one would think that would be win-win for everyone, right? Still wrong.

I stumbled across a post here on the New York Times Bits blog which asked, “Where is Apple’s Rental Service for Music?” in which the author discussed Steve Jobs’ changing position on movie rentals, but how Jobs still believed that people want to own their music.

From Bits:

For a set monthly fee, consumers could get something that approaches the promise of the original Napster: you can download any song you want and listen to it where you want. For the music industry, this creates a pool of revenue that can then be divided based on what people actually listen to. […] There is only one problem with this idea: Consumers haven’t been interested. Rhapsody, (the new company using the Napster name), Yahoo and others have been able to attract a few million subscribers. That’s a drop in the bucket compared to the number of people who buy songs from Apple at 99 cents or download them free with Limewire. For some, the idea that the music expires if you don’t pay the bill isn’t attractive. For others, there’s no appeal because the services don’t work with their favorite music player: the iPod.

Some in the music industry are not giving up on this, but they want to hide the subscription fee in something else. Universal Music is proposing what it calls the Total Music plan, which would bundle a music subscription service with a computer, Internet service, a mobile phone or something else. (This still wouldn’t do much unless Apple agreed to play along.)

This led me to another post here on the Midem blog by Ted Cohen who writes:

The success of the subscription model isn’t a possibility, it’s an inevitability. Access trumps ownership and the economics are irrefutable. For $12 a month, do you want to buy 12 tracks on iTunes or have unlimited access to over 3 million songs, along with recommendations, personalised radio, playlists and community.

iTunes is not enough for the avid music fan, subscription done right delivers an immersive, emotional experience at a great value. What has failed so far is the messaging, which is aptly illustrated in the way Paul presents the model: music rental. The experience isn’t rental, its access. The reality is that if Steve Jobs had introduced an iTunes subscription service at MacWorld yesterday, the discussion would be moot. Overnight, subscription would be cool and millions of iPod users would be loading thousand of tracks to take with them everywhere.

I couldn’t disagree more, and in a comment on that post I explained my reasons why, but I’d like to expand my thoughts a bit on that here in geishaland.

iTunes and the iPod are brilliant. Brilliantly conceived and brilliantly executed. Apple built the best possible mousetrap conceivable because they approached this from the end user’s point of view: what do music lovers want from their listening experience and let’s give it to them. Yes, iTunes is a closed system, but so what? Is that really a bad thing? The market has clearly chosen the iPod as the digital music player of choice, and iTunes as a client which handles total library management to being the point of purchase storefront is wonderfully designed and implemented. It couldn’t be easier for the consumer to use.

Cohen suggests that the problem is the message, that if a music subscription service is marketed correctly, all the perceptions that the customer is getting screwed might magically disappear: just like their music will when they stop paying that monthly fee. Sorry, I’m not buying that argument. The problem isn’t the message, the problem is the concept itself that people will be willing to pay a monthly fee to have “access” to millions of songs which they can listen to on a device other than an iPod (the world’s most popular digital music player) or a computer, but will never be able to burn it to a CD to listen in the car, or make someone a mix disc or even listen to it on the big home stereo because the customer will never own that music, they’ll just be renting it and the record companies will keep selling you that same content over and over again as long as you keep paying them.

Wow. Where do I sign up for that deal? :ermm:

The real problem I think is that these guys who keep insisting that music subscription services are going to work, they must work!, aren’t really music fans. They’re bottom line bean counting suits.

What they don’t get is that music fans collect music, and collecting music is about owning music. It’s about owning the complete catalogs of your favorite artists. It’s about finding that long lost B-Side on the back of The Police’s Wrapped Around Your Finger single from 1985. And it’s about album art. It’s about opening Pink Floyd’s The Wall to discover the amazing artwork inside and getting that sense of wonder and feeling of connection to the artist. And it’s about sharing that feeling with your friends and family members. It’s about mothers and fathers sharing “their” music with their children, and it’s about parents cringing but trying to understand what their kids are listening to. It’s about going thru your parent’s old vinyl and something old being something new again for another generation. It’s about walking into a record store and going thru all the bins, and then checking out the posters, and being immersed in everything music gives to us as human beings, and none of this can be duplicated with a subscription service, but some of this can be duplicated with things like iTunes where you can sit at your desk and peruse the store for hours on end, sampling things here and there until you decide to spend .99 on that song you danced to at your junior prom and losing yourself in that memory again and again, and owning that song will always make you feel connected to that moment in time, which is really what music is all about, feeling connected to moments in time – which is why we all collect music in the first place.

We’re all music lovers in my family. Between me, my husband, and my son, we own close to 20K songs in digital form. We have multiple varieties of iPods, and we all share our music with each other thru a seamless home network of shared external hard drives, all managed thru iTunes. We’ve completely digitized our CD collections which we’ve accumulated over the years, and where we needed to fill in some holes in our collection, we’ve been able to buy those songs thru iTunes, and we’ve also discovered a plethora of new artists thru iTunes such as Stéphane Pompougnac, Matthew Dear, Carrie Underwood, Thievery Corporation, Infidel Inc.; all which led to multiple album purchases thru iTunes – and without iTunes, we never would have bought that music, or even bothered to look for it had we not been part of the most amazing thing to happen to music in the 21st century.

Ted Cohen says that iTunes isn’t enough for the avid music fan. All I have to say to that is I’m grateful that Steve Jobs is an avid music fan.