Apple ponders unlimited iTunes access, says report

Slowing iPod sales could prod Apple to make the move, adds analyst

Ezra Gottheil, analyst with Technical Business Research, was somewhat skeptical that Apple would change its music model, but noted that the company's been having trouble pushing iPods. "Jobs has been quoted several times as saying 'people don't want to rent their music, they want to buy it'," said Gottheil. "But they may be considering this to fill a place in their portfolio for those who do want to rent music."

Such talks, if they are indeed taking place, could have been prompted by the slow-down in iPod sales. "The fourth quarter was essentially flat [in iPod unit sales], which is pretty darn bad, and they've dropped considerably since then," Gottheil said. "We've read it, and others have read it, as a saturation of the high-end music player business. There's a finite world-wide demand for something that just plays music."

Apple has seen iPod unit sales go up, but the average sales price (ASP) go down, he added, noting that the shift in buying patterns favored the less-expensive iPod shuffle and iPod nano. "Then the shuffle began to erode as attractive alternatives hit the market," said Gottheil. "Apple even lowered the price of the shuffle to keep it going."

A month ago, Apple slashed iPod shuffle prices.

It appears that Apple's now positioning the iPod touch, the device that resembles the popular iPhone smart phone, as the future of its player line, Gottheil continued. "This is a new market for them, a device that goes well beyond playing content."

Notably, Apple's top-of-the-line player can download movie rentals, the new iTunes service that CEO Steve Jobs introduced in mid-January. It's also the only iPod that can now download iTunes music via a WiFi connection.

Gartenberg made note of the connection between the existing movie rentals and the talk of unlimited access to iTunes music. "With the latest changes to the Fair Play DRM [digital rights management] to support movie rentals, the technology now would also be able to support a subscription service as well," said Gartenberg.

Apple officials were not available for comment.

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