Napster and the Subscription Model

2006.04.05   prev     next

IN his 2006 April 3 piece (Line56.com), “Why Subscription is Better,” William Pence of Napster does a valiant job of trying to make Napster’s subscription model sound superior to iTMS, but his article is laced with subtle distortions and omissions that are needed to make his case. Let’s take a look at some choice quotes:

How much would you pay to access every piece of recorded music from the touch of a button on your home stereo?

Does Napster or anyone else offer this, or is he talking about some hypothetical, future technology? And do I really want access to all recorded music? What if I only really like about two thousand songs or so out of half a million (i.e. much less than 1%)?

While much has been made of the so-called “a la carte model” driven by [iTMS]...

“Much has been made?” That makes it sound like a few pompous pundits have praised iTMS as a theoretically good idea. Shouldn’t Pence begin this sentence with, “While the vast majority of the digital-music buying public is choosing iTMS...”

[Subscription models] replace the idea of ownership with that of access, a model that has already been realized in the video world through cable television, Tivo and Netflix. The emergence and subsequent success of these services confirmed that people did not require ownership of their digital media...

Most of the material people watch on cable TV and Tivo are programs that they are unlikely to want to watch again and again, for the rest of their lives.  These same people own many DVDs containing the relatively small set of movies and shows that they want to be able to view in perpetuity. And Netflix?  I know only one person who tried it. He and his family of five used it for two months, then cancelled it when they ran out of movies they wanted to see.  Meanwhile, they have a large DVD collection that continues to grow.

The correct analogy (or example, rather) for audio is satellite radio, where people can be exposed to new music, and listen to ongoing, topical shows (e.g. Howard Stern, Fox News) that they usually don’t want to keep for repeated listening. Satellite radio is doing well, but in the internet-delivery audio market, the closest thing to it is podcasting, a phenomenon largely driven by Apple’s iTunes/iPod. Subscribing to podcasts makes perfect sense, and iTunes fully supports doing exactly that!

The primary reason that the a la carte model has dominated the first phase of the digital music revolution is because it replicates the experience of buying CDs and DVDs in the physical world, and that makes it easier for people to understand.

Who is he talking about, low-grade morons? Nobody seemed to have difficulty “understanding” podcasts — or cable TV and Tivo, for that matter. Is he saying that Napster and other subscription-based services (Yahoo) are doing poorly because the public is too dense to understand the superiority of those services? Great PR, dude.

[S]ubscription can be a far better proposition than “owning” a bunch of encrypted iTunes music files.

In case Pence is unclear on the concept of “owning”: It’s the opposite of renting. When you rent, you pay and pay, and never get to stop until you’re willing to let go of the thing you’re renting. When you own, you pay once and then you keep the thing forever. Got it? Not so hard to “understand.”

What happens as music formats change? In today’s online age, these formats will change and advance even faster than they did in the “offline” world.

Yes, I’m sure Apple will soon change iTunes and the iPod so that they refuse to play all the music that people have thus-far purchased from iTMS, requiring them to repurchase it all. Then, Napster can jump into the vacuum, scooping up those enraged, former Apple customers. So all Pence has to do is wait for Apple to commit such an incredibly collossal blunder, at which time we’ll all realize he was right: Subscription music is better.

Everyone can relate to the experience of buying a CD, listening to it three times, and then throwing it to the bottom of a pile to begin collecting dust.

I’ve done that a few times. A very few times. My usual policy has been that I won’t buy a CD unless it has at least four songs I really want, and now I won’t even do that — I can buy just the songs I like for a dollar a piece on iTMS. Four songs equals four dollars!

[W]hat, in reality, do you own after you shell out $1000 to buy 1000 iTunes songs, other than a set of instantly-obsolete music files which are bound to limited pieces of hardware?

Most of the 1,300 songs on my iPod came from my (or my wife’s) CDs. Only a small minority are from iTMS. If I subscribed to Napster, I would be paying monthly for access to all that music I already bought on CD, plus tens of thousands of songs in which I have no interest at all.

And what’s this about “bound to hardware?” I suppose Napster music floats magically through hyperspace into your brain? If that’s true, sign me up. But if it isn’t, then the relevant question is: Who is more likely to still be around five to ten years from now, iTunes, or Napster? If Napster goes away, so goes access to all that music. If iTMS goes away (not likely) you will still be able to play all the music you purchased from it, and by burning it to CD you can convert it to any format you please.

The true question is not ownership versus rental. The question is why, in the era of always-connected devices and computers, the concept of ownership should be relevant at all.

What portable digital audio player is Pence carrying around, that’s “always connected” to Napster? His phone, perhaps? How much would he have to pay to stream CD-quality music to his phone for hours at a time? And watch that battery — when it runs out, the music stops, and your phone calls stop too.

There is a reason that Apple opposes the idea of online subscriptions, and that is because a subscription opens access to music on a wide range of devices — not only PCs and Macs, but home network devices, home stereos, music-enabled cell phones, and satellite radio receivers. The one-size-fits-all iTunes model locks users into a single device and a single model — pay for each track and use it on a limited number of devices.

So Apple, long the underdog in the market against Microsoft, is now handily beating Microsoft in digital audio (and has handily beaten other subscription services already) by adopting a strategy that limits and harms users? Please. Apple is making forays into all the fields Pence describes above — think AirTunes, ROKR, Hi-Fi — and can continue to do so as easily, if not more so, as can Napster. Remember, Apple’s a hardware company.  (Notice also that Pence doesn’t mention automobile integration, where iPod is head-and-shoulders above anything else out there.)

[two very tiresome paragraphs that repeat over and over:] Virtually every manufacturer of digital music devices other than Apple now uses the Microsoft format.

And how well are they doing with it? What does it offer the consumers that they’re not already getting from Apple technologies? WMA is beneficial only to Microsoft, and is wholly designed and controlled by Microsoft. AAC, on the other hand, was developed by a joint committee of audio experts (which didn’t include Apple), and has been adopted as the audio format for all HD video discs. The reason Microsoft won’t use AAC is because they don’t like anything they don’t control.

The only proprietary part of iTMS-purchased files is the FairPlay DRM. On the Microsoft side, the DRM and the audio file format are proprietary. Sure, Microsoft will licence you their proprietary format — anything to undermine an independent standard.

Pence goes on to compare the digital music market to digital photography, pointing out that the latter is a smorgasbord of different products from different manufacturers, with no big, dominant player. This, he thinks, must be the future of digital music. (Why hasn’t it been so far? — oh yeah, we’re all morons.) In this analogy he ignores the fact that digital music is about artist-driven content which must be sold to customers, whereas digital photography is just about the device: Shoot your own pictures and do with them what you will.

Apple may dominate the first moves in this game, but the endgame will look much different.

At last (yes, the very last sentence of the article), we get a lukewarm admission that the people at Apple are doing great with their system. But of course, this acknowledgement comes with the immediate caveat that they just can’t possibly continue to do so.

Update 2007.04.10 — It’s been just over a year since I wrote this article, and now that Apple has announced the iPhone, I must eat a tiny bite of crow regarding my “watch that battery” comment. But even the iPhone isn’t going to be “always connected.” And need I even mention that the iPhone (the only music-playing phone to be getting major buzz since Pence’s “always connected” comment) is from Apple? And runs on iTunes, not Napster? Or that Microsoft has thrown its stake into something called “Zune” (flop, flop) that doesn’t interoperate with Napster any more than does the iPod or iPhone? And say, how has Napster been doing lately?

’Nough said.

Update 2008.03.13 — Don’t miss Roughly Drafted’s delightful WinCE timeline. Written over a year ago, but still very enjoyable and relevant as a comparison to the iPhone and its just-announced SDK.

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