The iPod killer?

When I was a young man, I loved getting a new tape cassette to put in what we kids referred to as a ‘ghetto blaster.’ When CDs became all the rage I traded in my tape collection a few pieces at a time to get the CDs of as many musicians as I could afford. At the time I was using an old 286 PC from IBM, and as I tried to think of what might replace the CD someday, I never thought about music on a PC. But I do remember thinking one day, as I changed CDs in my stereo, how awesome it would be to have a box that had every song every recorded inside, and all you had to do to listen to any song you wanted was simply select the song title and artists from a simple visual interface. The device I had in mind back then looked more like a big juke box, and the thought seemed on par with hovercrafts and personal jet packs.

Of course we all know how music has since progressed- computers turned songs completely digital, and now we have a wave of competing MP3 players on the market, chief among them the iPod. In all the buzz the iPod received when it launched, I was never really that interested. Not because I didn’t think it was a good product, I just felt there was something better and cheaper that would come along. And by cheaper I don’t mean the cost of the player, but the overall cost of listening to a lot of music month after month. At 99 cents a download, listening to one new song a day via iPod/iTunes came with a price tag of $30.00 a month.

When RealPlayer Rhapsody launched several years back, I was happy because here was a product that gave access to hundreds of thousands of songs, including most all newer artists, and the cost was just a flat $9.99 a month. That meant I could listen to 5 new songs a day, and my cost would be $9.99 via Rhapsody vs. $150.00 at iTunes. Of course the original Rhapsody service had its drawbacks. If you wanted to burn a song to a CD or MP3 player, you had to pay for the download (though it was only 79 cents a track). I loved the product primarily because my job required me being at a desk for long periods of time, so I could listen to music often, and could do so very cheaply. But I could see why Rhapsody had not replaced iPod/iTunes. Though it’s downloads were a little cheaper, it wasn’t a revolutionary product considering most people preferred to listen to music on a stereo or take their music with them (via CD or MP3 player) and not be tethered to a computer. People would rather pay 99 cents a track with no monthly fee than $9.99 a month and 79 cents a track. Plus the iPod was a part of pop culture and a lot of folks wanted an iPod just to be in the “in” crowd. But the iPod as a fad will eventually give way to another coveted device. The question is, which device will it be?

Here we are in 2007, the iPod is still the top dog, the CD is taking its last breath, and RealPlayer has launched Rhapsody to Go. Ladies and gentleman, I have seen the iPod killer, and it is this. This product is revolutionary. You can download any song to your PC (via the Rhapsody music player) or MP3 player without paying a download fee per track. You pay $14.99 a month. The Rhapsody MP3 player (from Sansa), which is the only compatible player for this service, looks a lot like an iPod (though a wee bit thicker and heavier), and comes in 2GB, 4GB, 6GB, and 8GB flavors, with more on the way. It plays video as well. So you can put 500 songs on your Rhapsody MP3 player, listen to them while jogging, in a car, or anywhere else for that matter, and all you pay is $14.99 a month. Using a simply auxiliary cable you can connect the device to your home or car stereo and get full digital sound. You can save the songs to your computer too. There are no individual download fees unless you want to burn the tracks to a CD (but who does these days?).

Naturally I thought Apple would not be far behind, and would simply adjust and make RealPlayer Rhapsody a short lived service. Evidently Steve Jobs (and a number of music journalists) just don’t get it. Or more likely Jobs gets it, but wants to buy some time before admitting it. This article from Wired shows why.

According to Jobs, Apple won’t offer a subscription service like that of RealPlayer Rhapsody because “customers don't seem to be interested in it…The subscription model has failed so far." That was a quote from Jobs. The article’s author, Leander Kahney, added “Jobs is right. There's no mainstream demand for music subscriptions. The music business isn't built on long-term rentals; it's built on one hit after another. It's confectionary. Tunes are addictive for a while and then discarded. It's like the drug business: Users are always looking for the next hit.”

I can see why Jobs is downplaying the subscription model- because his company doesn’t plan on going in that route yet, and he wants to help deflate any buzz other services might get in the press. But the concept that a subscription model is “renting” music vs. “buying” just doesn’t fit. Primarily because no one actually ever “buys” a song- the song always belongs to the record label. When you download a track from iTunes you are merely renting that song until you accidentally delete it, reformat your hard drive, or possibly until iTunes cancels its service or changes their file formatting on a future device.

What Kahney says about songs being “addictive for a while and then discarded” actually hurts his argument since subscription services allow you to listen to the next new tune as soon as it launches without any additional cost, whereas with an individual download you have to pay more money for each tune you want to hear, all while knowing that you paid 99 cents a track for a bunch of tracks that you already have, as Kahney would say, “discarded.”

A pay-per-download model will in theory allow you to amass a library of songs you can continue to listen to in the future without paying, but it all comes back to the cost. Want to compile a library of 10,000 songs? That’ll be $10,000.00 on iTunes. It’ll take 667 months, or 55 and ½ years before I spend that much on my RealPlayer Rhapsody service. I remember how much I spent to amass my collection of tape cassettes only to trade those in and spend more money to amass a collection of CDs, only to have since sold many of them online for a fraction of what I originally paid. In 55 years no one will be listening to an iPod, we can assume that much. So is it really worthwhile to spend all that money to amass a collection of songs you may only listen to for a few years? If 10,000 is too high for you, even downloading 1000 songs would cost the equivalent of 5 and ½ years of Rhapsody service. And in that 5 and ½ year period, while you can only listen to the 1000 songs for which you have paid, I can listen to hundreds of thousands via Rhapsody to Go. The subscription model simply makes sense, and this most recent attempt by Jobs to dismiss it seems like he just wants to buy time until Apple is ready to publicly accept this reality. With all I know about him, I cannot imagine for a minute that Steve Jobs really believes the pay-per-download model is the wave of the future.