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March 09, 2006

Keep Experimenting, Apple

Peter Burrows

I'm glad to see signs that Apple may be showing more flexibility in its pricing philosophy on the iTunes front. Yesterday, it began selling so-called "Multi-Pass" packages of Comedy Channel's The Daily Show and The Colbert Report, that let you buy 16 episodes for $9.99. And Apple Insider ran a story a few days ago suggesting Apple may have commissioned a third party survey, to gauge viewer interest in a video-on-demand service using iTunes that would might let viewers choose from 1,000 movies for a monthly fee, possibly for as low as $10.

UPDATE: I got a call from Tom Southwick, senior vice president of communicaions for Starz Entertainment. He tells me that it was Starz that commissioned the survey mentioned above, because it is interested in having Apple become a partner for its new Vongo movie download service. He says there have been some talks, but Apple still seems committed to its a la carte approach. So there goes one piece of evidence of a change in philosophy from Apple.

I don't know if Apple was really behind this survey, and the Muli-Pass offering is hardly a radical leap into a new pricing model. But I hope we're seeing a change from Apple's religious devotion to the a la carte model. While I agree that Apple's simple pricing structure is main reason for iTunes' huge success, it's time to find out how else folks might want to buy.

My hunch: Apple will find that it likes getting paid $9.99 by John Stewart fans, especially since many will not even watch all of the episodes they pay for. And if it really does start investigating new models, I'd bet Apple would find ways to make iTunes a far more powerful platform for selling digital media than it is today, with a wide variety of customer types. The most radical possibility is that the world's digerati, or at least some of them, might drop cable service altoghether to rely on iTunes instead (though Apple would need to broaden its range of programming big-time for iTunes for it to be a true cable replacement alternative).

But there are other sizeable markets waiting to be harvested, it seems to me. If Apple offered a movie "rental" service--like an online Neflix that gave you the right to view but not own--I'm sure it would appeal to plenty of road warriors (who could then get a new movie for each flight, without having to buy movies they'd probably never want to watch again). And if Apple ever offered a music subscription, a la Real Networks' Rhapsody, millions of iPod owners might suddenly agree to pay Apple another $10 a month. That's roughly an order of magnitude more than most iPod owners currently spend on iTune.

03:17 PM

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You did a pretty good job with this but the news agency hoi poli are calling it a subscription service. They need to do more research.

A "subscription service" is not a subscription, you don't return magazines after the subscription expires. Rhapsody is a rental service, you lose the video once you stop paying the "rent."

Posted by: Fred C. Dobbs at March 9, 2006 05:11 PM

Please, oh please, oh please correct your spelling. It's horrible for a business article.

Posted by: Shunnabunich at March 9, 2006 11:35 PM

Spelling. I see spelling errors on a lot "blog" sites. Probably the time constraints in getting the article up is a factor. When I write copy I like to do it in TextEdit where I can use the built in spelling auto-checking feature. The auto-checking even works in Safari when I am in this Comments form field.

Posted by: Fred C. Dobbs at March 10, 2006 09:28 AM

If anything, this restores the iTunes pricing model, not departs. A season of shows, especially weekly shows is not equivalent to a an album of music. But $10 for a set number is very similar to album pricing. The major difference being: you can sample the other episodes to filter out the duds. But then again, a daily show is allowed and appreciated for being formulaic in ways music (for many) doesn't.

Posted by: SamT at March 10, 2006 09:29 AM

Steve Jobs has said that people do not want to rent their MUSIC, not movies. While the music portion is a la carte, who's to say that Apple is against renting for movies?

Posted by: deepkid at March 10, 2006 10:14 AM

Sub works for a TV show - you now you like the show - you're reasonably assured of the quality, the genre and each show is much like the previous one. If you like the Daily Show or Battlestar Galactica, you can sign up so it's automtiaclly downloaded and uploaded to your ipod when connected - CONVENIENT and easy to understand. NO more having to guess - did I download ep 6 or ep 7? Etc ...

I think movies would have to work like the TV shows. You're restricted to watching it on an authorized computer but you'd have to be able to keep it "forever," otherwise, people will balk - it's more perception than anything else but people want the assurance that they could watch it whenever - if they can't get to it this week, they can watch it next week. That's the appeal of Netflix. You pay no more per month if you're so busy you can't that movie, you can make up for for it by watching 7 the next month.

Music is COMPLETELY different. Sub music requires YOU the consumer to spend time putting together a playlist and then downloading it. That would be like getting raw footage of a movie and expecting you to edit it together - would that appeal to some people - sure. After all the 30 days free and the university deals, the TOTAL audience of sub music is around 2.5 million users after 3 YEARS of being around. It's like throat singing - it's a limited audience.

itunes wins because it's more CONVENIENT than all the oter options and all the other mp3 choices. sub music is not more convenient, it's LESS CONVENIENT. If you have $15 a month to burn and you want music, get satellite radio - it's PROFESSIONAL programmed - don't like it, switch channels. For PC sub music, you have to listen to every track to see if you like it, put it in a playlist, repeat a couple hundred times and repeat every month - who has that much free time? A few million people - enough for Creative & Yahoo to make a go of it but not enough for anyone to care.

Posted by: jbelkin at March 10, 2006 03:50 PM


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