Apple may bundle unlimited iTunes with iPods

It's about time! A report by the Financial Times (registration required) cites unnamed executives who say that Apple is in talks with record labels to offer access to the entire iTunes music library for a lump sum price. The fee would be added as a premium option on an iPod or iPhone, or it could come as a monthly charge. It would allow downloading of any song at any time so long as the purchaser still owns the device, and the songs would be yours to keep.

This latest concept is similar to Nokia's "Comes With Music" program set to launch later this year. Nokia is reportedly rolling an $80 fee into the price of compatible phones for one year of access to Nokia's music store, which includes music from labels like Universal.

Apple's plan is different in several respects. Since the average iPod owner buys about 20 tracks from the iTunes, Apple wants to make the premium about $20, arguing that it should cover the average consumer's downloads. Then the owner can make unlimited music downloads from the iTunes Store for the life of the device. Once downloaded, the tracks are yours to keep, even if you get rid of the original iPod or iPhone. And since iPod and phone owners tend to replace devices fairly regularly, the record labels would be getting the fee whether or not the consumer makes any further downloads. Silicon Alley Insider did the math and thinks it's a good deal all around. But according to the Financial Times' sources, the labels are looking for numbers closer to the $80 Nokia is reported to be paying.

There's still the question of DRM, however. Even though the tracks are yours, any non-iTunes Plus tracks will still be beholden to FairPlay restrictions, so this could also be a good way to lock consumers into repeat Apple purchases (unless they're willing to have their music tethered to their computers). The Nokia plan use Plays For Sure, which won't play for sure on iPods or even Zunes, and Comes With Music doesn't allow you to keep listening to tracks once your subscription period has expired

While Apple's program certainly sounds like it could go over well with consumers, the negotiations are not over. Apple will need to get all the labels on board for the plan to work. If we've learned anything from recent music licensing debates, it's that they are contentious. How much do the songwriters deserve? What should be the labels' share? In addition, the labels are sure to want a plan that increases their revenue, rather than a plan that simply compensates them for what the average iPod owner already pays.

While the labels remain leery of finding themselves under Jobs' thumb once more, their embrace of DRM-free formats that can play on the iPod has negated one of Apple's longtime advantages in these licensing negotiations, and could well make the labels more likely to deal. They are also in the position to offer Apple a carrot of their own: access to MP3 files for regular, pay-per-track downloads (iTunes currently has only EMI on board with DRM-free music).

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itunes-with-ipods.html