Success Of iTunes May Be Short Lived
Subscription Services Will Replace Downloads as the Dominant
Online Music Model
Boston, MA - May 16, 2005 - While online
music stores like Apple's iTunes
have attracted millions of customers by selling downloads of songs
or albums, changing market conditions will make subscription-based
music services the dominant model for selling online music in the
future. That is the conclusion of "Online Music: Will Napster Be
the Next iTunes as Subscriptions Replace Downloads?" a new report
from global technology research and consulting firm Strategy
Analytics. According to this report, the shift toward subscription
music services will be driven by a combination of changing consumer
expectations as well as pressure from broadband service providers
and record companies.
"The retail download model popularized by iTunes is costly and
inefficient," says Martin Olausson, Senior Analyst with the
company's Broadband Media & Communications service. "As the
online music market matures, most consumers will place greater
value on having access to a wide range of music instead of
purchasing a smaller number of songs."
Laptop Battery In addition to changing consumer needs, the report notes that
many broadband service providers prefer to offer a subscription
service, such as Real Networks' Rhapsody, which generates steady
monthly revenues and helps deter broadband churn. Finally, major
record companies are dissatisfied with the revenue they receive
from low-cost download sales, and will increasingly focus on
alternative
business models for selling
music online.
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Thinkpad As the online music market evolves, Strategy Analytics
recommends that stakeholders in the industry embrace the
subscription-based business model and position themselves to take
full advantage of the broadband opportunity for online music.
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