Apple is talking with major record labels about offering unlimited access to the iTunes music collection for a flat fee paid when purchasing a new iPod, or as a monthly subscription fee, the Financial Times reported Wednesday.
The move would be a dramatic change from Apple's current business model, under which the company profits from the sales of its iPod music players but essentially breaks even on the A$1.69 per track charge customers pay to download music from iTunes.
"Rumors of Apple doing a subscription music service are as old as ... well, as old as the iPod itself," said Michael Gartenberg, analyst with JupiterResearch, in a post to his blog Wednesday. "But a new report [is] that Apple will be doing exactly that. It appears there are two models under discussion, a traditional rental service with a monthly fee and a model tied to the life of a specific device with a single up-front payment, similar to Nokia's "Comes With Music."
According to the Financial Times, the discussions involve both a one-time fee as well as possible subscription models. In the former, Apple could add as much as US$100 to the price of its iPod and iPhone devices in exchange for unlimited access to iTunes for the life of the hardware, sources told the newspaper. The company is also talking with record companies about subscription plans that would run US$7-$8 per month.
Several services, including RealNetworks' Rhapsody, use the "all-you-can-eat" subscription model, but charge considerably more each month. Rhapsody's fees, for example, run US$12.99 per month for unlimited access from a computer, or US$14.99 per month to load selected music players with any tracks from the service's library.