An Apple music subscription service is never coming. Seems like it would be great, right? Give apple $10 or $12 a month, and every time you go into the iTunes store discover the entire world of music to stream at your fingertips.
Don't get me wrong, I've got nothing against Rhapsody—it's worked out most of its bugs, the mobile app is totally functional, and $12 a month seems like a great deal to be able to listen to anything I want, whenever I want. But it's kind of a pain in the ass—inevitably I always end up with iTunes open anyways, and I end up toggling back and forth between my iTunes and the Rhapsody browser. It would just be easier to consolidate my life into one place. It's like before the iPhone, when I used to have to carry two devices—a phone, and an iPod. I'm willing to commit to Apple products, but I how many do I really need?
But Steve Jobs is much smarter than I am.
Slacker Radio, one of the streaming music competitors to Pandora, Spotify and Rdio recently raised $17.5M in funding and is planning to launch an "on-demand" service this year, meaning you'll be able to play whatever you want, instead of having music be randomized like it is in Pandora and currently is with Slacker.
Earlier this week Apple announced that they'll start selling subscriptions for third-party vendors through iTunes, as Huffington Post notes, for all kinds of media—music, magazines, digital newspapers, you name it. And like everything Apple does with third party vendors, they'll keep 30% of the revenue on subscriptions sold through the iTunes store.
What this means is that you'll be able to charge your Rhapsody or Slacker Radio subscription directly through iTunes, which will admittedly make signing up more convenient to people who haven't adopted the idea of a monthly music subscription yet, and Apple will keep 30% of the revenue. And if these companies want to have their app available on Apple products at all, they'll need to agree that they can't sell them to you any cheaper than if you buy it from them directly.
Apple is staying out of the business of licensing music from the labels—they're letting all the vendors like Slacker and Pandora worry about that—but they're still keeping 30% of the subscription revenue. And the licensing burden on these companies is no small burden—Pandora operated on a loss of $16.7M last year, and much of Slacker's $17.5M new funding round will get shelled out in licensing fees. By using its ubiquity to place itself between music consumers and the third-party vendors, Apple leverages 30% of the upside, and 0% of the downside.
You have to admit, it's pretty smart. But it's a bum-out that we'll likely never be able to get our monthly music fix directly through iTunes itself.