I like the subscription model a lot. For one thing, it's one of the last ways for vendors to set themselves apart from Apple and the iPod. Clearly, there's a consumer market for subscriptions as well, even thought current services haven't taken off the way iTunes has. There are two things missing that's preventing these services from going mainstream. First, there has yet to be a clear articulation of the benefits of this type of service to consumers. As I've said in the past, consumers have traditionally had only two ways of getting music: free radio and purchased music. If subscription services are ever going to take off, there's got to be some effort to explain the benefits of the subscription model to consumers.
But that's only part of the story. The second is devices.
Connected phones and subscription services together can help generate the next big inflection point in the music industry.
Subscription services have until for the most part been linked to the PC, and the PC isn't where most consumers want to listen to music. Yes, there have been some good efforts, like the Rhapsody integration with Sonos, but that's not yet a solution that's practical for everyone. The real key is to link subscription services with connected devices that consumers already own: phones. It's a no-brainer. Take a device that's already used for listening to music, already has a ubiquitous internet connection and pair it with a few million songs that can be streamed with ease. Oddly, vendors such as Nokia and Microsoft who offer both subscription music services and phones haven't figured out how to pair them together.
In the last week, Apple approved the Spotify app and Rhapsody submitted a new iPhone app. The iPhone is particularly important -- according to Interpret's data, it's the one phone users are purchasing for its media capabilities. With these two apps, consumers will for the first time have the chance to create powerful individualized services, optimized for the their listening tastes. If Rhapsody and Spotify bother to take the time to explain just how the subscription model can co-exist with the music already owned by the consumers, we just might see theses services go from niche, music aficionado-oriented brands to mainstream success. It's been a long time coming, and if these services do start to gain traction, I expect we'll see Apple launch their own service as well. Connected phones and subscription services together can help generate the next big inflection point in the music industry. Now if Apple will just approve that Rhapsody app so I can finally get my stream on.
Michael Gartenberg is vice president of strategy and analysis at Interpret, LLC. His weblog can be found at gartenblog.net, and he can be emailed at gartenberg AT gmail DOT com. Views expressed here are his own.