Microsoft hints at a free-with-subscription flash Zune

So, we've finally gotten over that heap-big firmware 1.3 update hump, and now that Zune users can finally do fancy things like sync with their computers, it's about time to start looking ahead at what Microsoft has planned for its Zune ecosystem down the road. Of course, everybody has a personal wishlist, but Zune marketing director Jason Reindorp is hinting at a welcome development on the subscription front: "The subscription service was a solid move on our part. We've seen 65% growth in our subscription base, although the number is still small. It could be better and it could become different -- we're looking at what other flavors of subscriptions there could be. We've been looking at the subscription model where you pay a certain amount and you essentially get the cell phone for free." That seems to imply a cheap-or-free Zune, most likely a less pricey flash player, like the ones Napster has been giving away for a while. It ain't no WiFi syncing, but it's a start.

[Joe M. @ Apr 4th 2007 12:12PM]

I think the subscription model is great... I downloaded 12-15 CDs worth off the Zune marketplace last night (my first day as a member).

Good for people like me who quickly grow bored of their music!

A Free flash based Zune would be a welcome addition.

[John Miller @ Apr 4th 2007 12:13PM]

Nice. Once you use a subscription music service, the thought of ever going back to paying by the track will make you sick. Too bad Zune isn't PlaysforSure compatible, though. I suppose I'll be sticking to my Gigabeat S.

[Steve @ Apr 4th 2007 12:17PM]

so, for this player to have any quality at all, microsoft is going to take yet more up-front losses in order to claw out a niche? how many more years will this push their break-even date back by?

[max andrews @ Apr 4th 2007 7:23PM]

Yeah great, let's mold music into the cellular sales model so we can get slapped with cancellation fees and bandwidth overages! But the player was free!

[Joe V @ Apr 4th 2007 12:38PM]

It was always my understanding that the online music stores are there to sell the higher-margin players. When you give away the players with a subscription, you're basically subsidizing the music store.

Apple has always said they only make a few pennies per track sold on iTunes. I don't know what it's like with subscriptions, but it doesn't seem like it could be much better for the provider. It's not like the cell phone market, where a year's subscription (and the likelihood of a long contract) can easily offset the cost of the handset.

Things must be really dire for Microsoft to be considering this option. If they had nothing else to bring to the table, why did they bother?

[strider_mt2k @ Apr 4th 2007 12:45PM]

1GB is getting to be the new 128MB.

It's too common and not nearly enough!

[brett @ Apr 4th 2007 1:04PM]

Welcome to the antisocial?

[BTS.WRKNG @ Apr 4th 2007 2:08PM]

Good old predictable Microsoft, always aiming squarely at the lowest common denominator.

[narco @ Apr 4th 2007 1:37PM]

Mmm... a bunch of vinyl with the words 'all you can eat' over it? Sounds like heaven to me.

Paying monthly for my music? No way. I'm not even 30 yet and I'm already missing the art of the full-length album.

Fishes,
narco.

[S @ Apr 4th 2007 1:44PM]

"We've been looking at the subscription model where you pay a certain amount and you essentially get the cell phone for free."
Watchout for this! That is not how it works.........you sign a CONTRACT which you must pay a hefty fee to get out of. Sounds just like microsoft, and not something I would want to get into.

[DIMEBAG @ Apr 4th 2007 2:09PM]

I like the comments that make music sound disposable… As an artist and musician this really makes me sick.

[Brian @ Apr 4th 2007 1:50PM]

Hells yes! I can't wait to fill my Zune with more songs! I'll even redownload the ones I ripped from CD!

The music in the marketplace is much better quality than the crap you download online. (Makes a big dif when you're using $500 headphones)

I've spent over $300, in Napster, before I bought my Zune. (Thanks to fairuse4wma for converting to unencrypted, so I could put it on my new player)

[John Miller @ Apr 4th 2007 1:57PM]

OMG, what a horror! You can download however much music you want and you get a free DAP, but you're FORCED to pay $10 a month for a year! Sounds a lot like slavery to me.

[raulr @ Apr 4th 2007 2:40PM]

@Joe V,

That may be the case for pay by track services, but subscription services don't sell devices to make money off of. There's got to be better profit on a subscription model, otherwise you wouldn't have so many subscription services. Apple uses it's pay by track service to push iPods as you said. Napster, URGE, and countless others don't really sell devices.

[h0mi @ Apr 4th 2007 2:23PM]

If that free zune did videos, and video content was part of the subscription, I'd be interested, especially if it were stream-able to the 360.

Hmmm...

[hchute @ Apr 4th 2007 2:47PM]

I agree with other reader's comments about how great subscription services are. Totally worth the small monthly fee. After trying it, I'm not likely to go back to paying by the track, or paying by the album. And not likely to buy CDs either.

And I'd love to get a new flash memory player each time I sign up for, say, another 12-months subscription. The model makes sense.

[Rick Lyon @ Apr 4th 2007 3:04PM]

They can't sell these so M$ is forced to give them away? hahaha

[anonymouspimp @ Apr 5th 2007 1:02PM]

@Rick Lyon "They can't sell these so M$ is forced to give them away? hahaha"

LOL, what are you talking about? They haven't ever offered these for sale! How do you know they can't sell them? DO you really think that if Miscrosoft had a full line of players (the Zune + an inexpensive flash model) they couldn't at least sell as many players as Sandisk and take the #2 spot behind Apple?

Haha, people like you make me laugh... you just don't get it. lol

[RITTER @ Apr 4th 2007 3:27PM]

*DIMEBAG

The benefit of the subscription model is that I can check out your catalog without risk, if I like it I can buy it, or continue to rent it. You get paid, regardless. If it's garbage I can delete it and lose nothing.

Thats a pretty risky prospect, and rather than waste $10 on some new shit, consumers will continue to stick with the over-hyped, mass-marketed slop killing the music industry.

The All-You-Can model is great for experimenting and I have found a ton of great artists that I would not have thought about dropping a single dime on.

[RITTER @ Apr 4th 2007 3:34PM]

*BTS.WRKNG

Its good someone is looking out for the lowest common denominator... What's the point of a multi-gig DAP if you can't afford to fill it up...

This way a consumer can get all the music they want for the price of a single CD, per month... you like it that much, don't like the idea of renting music? we'll how about buying the tracks and burning a disc or two?

[tim @ Apr 4th 2007 4:58PM]

It seems absurd to post the wishful thinking of a Microsoft exec as a valid rumor. They have pretty much claimed they are pursuing everything imaginable in the digital music world, but have delivered almost nothing (certainly nothing new).

Currently, not a single subscription service is profitable. (Real has profits that are largely from paid content (sports) streams, software and services.) The reason they all exist is because Microsoft allows them to exist by pricing WMA licensing way below market value, because they hope to someday have tens of millions of subscribers (but none of them has gotten to a million yet), and because if they can stay afloat, it's guaranteed money.

However, there is no differentiation that is significant. As long as their are 5 or more services, they just kill each other. Acquisition costs, churn, and marketing make them unprofitable. (Also, they pay studios and artists much less (which makes it attractive) but it is guaranteed payments they must make.

Microsoft (somehow) is barely making a profit on a device that everyone else (even small players in the market like Cowon, Coby, etc...) can make money off of. No one makes money off of subs. How does this become viable at all?

Microsoft is just trying to play up their 65% growth, as if subs have a huge future. What they aren't telling you is that this is probably along the lines of 3% of Zune owners grew to 5% of Zune owners with about 600,000-700,000 devices sold. Woohoo!

[ddw @ Apr 4th 2007 6:09PM]

The subscription model is actually pretty good.

Just think, if I had an online subscription model back when I paid massive cash for all of those *Nsync and Backstreet Boys albums, then I wouldn't feel like such an idiot now.

[garbuhj @ Apr 5th 2007 5:51AM]

Here's are the problem with subscription services.

If the subscription service is $15 per month, some months you'll listen to a lot of new music, but a lot of times over the months you'll be listening to the same songs that you could've bought with the same money. Then there will be months where you're really busy at work or school and you won't have time to download or listen to anything new at all. On those months you've wasted the money you spent on access to music that you never listened to.

Eventually you'll want to buy a new player, and the one you really want then might not use the same subscription service (if it uses any at all), and so any organization and rating systems you put a lot of work into will not transfer. And the new service may not have all the songs that you've grown to love while listening to your current service. And in the fast paced world of DAPs, eventually every subscription service will either increase it's prices more than you like, or morph into a different service, or just be ended altogether.

At that point after 3 years, you've spent $540 on music and have nothing to show for it.

If you'd used that same money to buy albums for $10 each (like at iTunes, with it's new non-DRM music or other similar competing download services) you'd have 54 albums that you own and can do anything you want with. Do you really hear more than 18 albums or 180 songs per year that are worth buying? I listen to a lot of new music through alternative means such as pandora and others, but I doubt I hear more than 18 albums or 180 songs per year that are really worth listening to more than a couple of times.

It comes down to how you listen to music. If you never listen to the same thing twice, then a subscription service makes sense. But if you like to listen to a lot of new music, but also like to keep hearing some of your favorites over and over again, it probably makes sense not to use a subscription service.

[tim @ Apr 5th 2007 7:43AM]

"Just think, if I had an online subscription model back when I paid massive cash for all of those *Nsync and Backstreet Boys albums, then I wouldn't feel like such an idiot now."

Problem is EVERYONE ELSE will still think you're an idiot.

[Joe Cheng @ Apr 5th 2007 3:21PM]

[I'm a Microsoft employee but not on anything Zune related]

> Eventually you'll want to buy a new player, and the one you really want then might not use the same subscription service (if it uses any at all), and so any organization and rating systems you put a lot of work into will not transfer. <

You will be so much more screwed if you paid for a lot of DRMed tracks and those don't transfer. Now you've lost organization and rating systems AND THE MUSIC TOO.

> I listen to a lot of new music through alternative means such as pandora and others, but I doubt I hear more than 18 albums or 180 songs per year that are really worth listening to more than a couple of times. <

You might be surprised how signing up for a subscription service changes your listening habits. I listen to whole new genres of music that I never would have tried before.

> If you never listen to the same thing twice, then a subscription service makes sense. <

I'm sure you meant that as hyperbole but I wanted to point it out for the benefit of other readers. The music that I listen to tends to have a halflife of 3-6 months. So of those 54 albums over 3 years, I'd still be interested in... well, I don't have time to do the math but it's a small subset. If your interest in any given piece of music is likely to decrease over time (and whose musical tastes don't change as the years go by? Think back to where you were five years ago, do you listen to all of those same songs?) then depending on the shape and slope of that curve, subscription music might be for you. From my experience, way more people would benefit from subscription music if they only thought rationally about it.

But even if I had to pay a slight price premium for subscription music, I would do it; the freedom from having to make a purchasing decision each time I think about downloading a song is very powerful. It's like the difference between shooting with a digital camera versus a film one.

[BJ Nemeth @ Apr 6th 2007 12:28AM]

Subscription definitely makes sense for some people's listening habits, but not mine. Like many things in life, one size does *not* fit all.

Remember the old offers of 12 CDs/cassettes/records for only 1¢? Yes, it sounded like a great deal, but it was basically a variation on the current subscription model. They hook you with the idea, and then you find yourself locked into a long-term contract paying crappy prices for back catalog albums. I know very few people from that era that were satsified with those offers by the time they finished.

Consumers remember things like that.

Modern consumers are fatigued by the number of monthly fees in their lives. The adults among you should just take a moment to consider the number of monthly payments you make each and every month -- mortgage/rent, utilities, credit cards, cellphones, cable TV, internet access, TiVo service, fitness clubs, MMORPGs, and who knows what else. I'd guess that the average adult consumer has at least 3 or 4 more monthly fees than they had a generation ago.

In that climate, it's nice to be able to buy songs one at a time, for a dollar each. Or splurge, and spend $10 on an album. Even if you end up paying more in the long run (or listening to less music), it's nice to avoid yet another monthly fee, and make your decisions on a per-purchase basis. And if you ever miss a payment, you don't lose *all* of your music.

The record companies have always been eager to push the subscription model. In their ideal world, every consumer in the world would pay a standard monthly fee for their entire lives. (It took the persuasion of Steve Jobs to give consumers any alternative to subscriptions at all.)

Companies love monthly subscriptions, but most consumers hate them.

I'd love to see data from the PlaysForSure music stores that offer both single-song purchases and subscriptions. What percentage of *their* consumers choose subscriptions? Of course, that data would have to take into account all of the songs purchased from eMusic.com (the #2 online store behind iTunes) and ripped from newly-purchased CDs with the primary intent of playing the songs on a PlaysForSure compatible music player.

Subscription music = DRM for LIFE!