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"Apple\u2019s CEO Steve Jobs has for years stood adamant about the business model employed by the iTunes Store. It would remain strictly pay-to-own. Nothing would change that. It is what has proven most successful for the company - despite the emergence of numerous buffet-style options in the digital download marketplace. Why try to amend or rearrange something that has for several years worked quite well. Four-billion-plus songs sold so far? Mr Jobs has a pretty nice number to show any doubters of his \u201Cstick-with-it-ness.\u201D\nYet we now see in a report delivered by the Financial Times only hours ago that Apple is presently \u201Cin discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.\u201D\nThis news of course immediately brings to mind that negotiated settlement from way back when pertaining to Microsoft\u2019s launch of the first-generation Zune music player and the company\u2019s promise of payments of $1 per device to Universal Music Group. Except, well, this story is apparently much, much bigger. The talks Apple is evidently working through behind closed doors include multiple music industry behemoths. Many onlookers to this developing story are altogether astonished - and understandably so.\nSure, Apple - and its chief executive especially - is a company that has been known to live for surprise and paradigm shifts and the like. But this news seems almost entirely antithetical to the way in which it has conducted itself in the digital media marketplace since the launch of the iPod earlier this century.\nThe only outstanding hint of this change in Apple\u2019s strategy for the iTunes Store was the recent debut of the iTunes Move Rentals platform. With the new system, officially unveiled at the Macworld Conference &amp; Expo in San Francisco, California, this past January, customers can now pay less for digital films than they would to buy them outright, albeit with a compromise of en eventual expiration of the downloaded movie(s). Still, even with the launch of movie rentals in mind, one cannot draw a very clear parallel with the music distribution side of the business. Music and movies are hardly synonymous. Also, it must be said that iTunes customers are still required to pay for movie downloads - whether purchased or rented. Free, subsidized music downloads is a concept that the Big Four must have at least some reservation about.\nThe FT explains Apple\u2019s pursuit of blanket access for all music for iPod and iPhone customers as one that may be an attempt to preempt the emergence of a new market phenom in the form of Nokia, the Finnish mobile phone maker of global repute that \u201Cis understood to be offering almost $80 per handset to music industry partners,\u201D a sum that would be apportioned \u201Caccording to their share of the market.\u201D The FT report goes on to reference statements made by unnamed executives purportedly \u201Cfamiliar with the negotiations\u201D that Apple has thus far only made an offer of $20 per device.\nOf course, it\u2019s hugely important to note that the market for premium music-download-compatible Nokia handsets is rather small when compared to Apple\u2019s share. The iPod has effectively become the most ubiquitous portable music device on earth. It has already surpassed the fabled Sony Walkman line of cassette and CD players in sheer volume sold. Furthermore, it behooves us to remind ourselves that Apple\u2019s iTunes sales figures, which have been analyzed frequently by numerous third parties, has only shown an average customer of the iTunes music store to have purchased music downloads that amount to the equivalent of roughly one album\u2019s worth of material, give or take a few tracks. That fact surely must weigh greatly in the discussions currently underway between Apple and any and all large record companies."^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2008/03/19/itunes-music-subsidies/>