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Tuesday, September 1, 2009

The End Of iTunes?

Apple has recently approved the new Spotify app for the iPhone, which may have implications that go way beyond that of a normal phone app.

For those of you who don't know about Spotify, it's a Swedish streaming music service that has taken Europe by storm. In fact, England alone now has over 1 million subscribers, which is pretty incredible considering that there's only 60 million people in the country!

What people like about Spotify is it's iTunes-like simplicity and the fact that you have access to over 6 million songs (almost as many as iTunes). But unlike iTunes, Spotify is a subscription service, costing about £10 a month (about $16 US).

Industry pundits have been saying for some time that the future of the music business is in subscription, and of course, the record labels love it since they'd be getting a set amount of money every month (just like your cable company). In fact, they like it so much that all the majors have invested in Spotify, which puts them even more at odds with their artists, who are all pretty sure that they won't be seeing too much of the income given the "interesting" accounting the labels use.

To give you an example of the money we're talking here - if you have 10 million subscribers at just $10 a month, that's $100 million dollars! And that's projected from the US alone. It's great for the labels because it's a consistent income stream. It's great for the subscriber because he can access 6 million songs for $10 or so a month rather than getting only 10 songs from iTunes. But no one knows how that income will be shared with the artist, and that's what they're scared about.

But there's more. Why would Apple approve an iPhone app that would make the iTunes store potentially obsolete? Would it rather sell iPhones and iPods than downloads? Probably.

But don't be too shocked if Apple has a surprise up their sleeves, like a subscription service of their own. Could we be seeing such a September surprise at their "Let's Rock" announcement next Tuesday?

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