A Wild Theory About Apple and Subscription Services

Apple has consistently said they don’t have interest in the music rental-subscription market.  There’s speculation
to the contrary, and, to many, Apple’s line seems like a silly business
move. Many iPod users are totally uninterested in Napster To Go because
of the incompatiblity and would jump at an Apple subscription, not to
mention Apple’s significantly superior catalog. 

So maybe Apple isn’t resisting the rental-subscription model
exactly.  The major record labels, which are generally annoyed
with Apple’s use of FairPlay DRM to restrict compatibility, might be refusing to license an Apple subscription service so long
as Apple refuses to support WMA and other portable players.  And,
given Apple’s strategy of using iTMS to drive iPod sales and vice-versa, that move
would be totally counterproductive.  Perhaps the record labels are
using the licensing as leverage, and Apple’s resisting anything that inhibits its
iTMS-iPod strategy.

More on the Napster 2.0 DRM Decryption Utility Development

I want to make sure to point once again to the comments following my post
on the development of a Napster 2.0 DRM decryption tool.  Alex
Goodwin made
a series of clarifications, repeating that the decryption
utility is only in development and is not complete.  Many
commenters railed against my post as premature, but, in my own defense,
it was other news sites that “jumped the gun.” They completely
misconstrued the post as well as Cody’s own blog – I spoke of the tool throughout in the future tense, and the
very first line clearly stated that the utility was, according to Cody,
only near completion and not actually complete.  This, I feel, is
still accurate and useful to report, and I am fairly confident that if
not Cody then someone else will soon be able to create a decryption utility –
it is inevitable.  Reporting on the progress, strategy, and
potential impact of the development was my purpose.  However, the extent to
which my post contributed to the generation of misinformation 
is quite unfortunate, so I want to make sure to flag the
comments.  Again: the utility is not complete, it is in
development and, according to Cody, nearing completion.

Some Additional Points Re: Rhapsody 3.0

1.  We’ve noted
the general shift away from Helix-wrapped AAC, with Real now turning to
WMA for To Go and selling both AAC and WMA.  News.com also reports
that Real has reestablished compatibility with the iPod for purchased
content.   Another interesting aspect of the new Rhapsody is
reliance on Janus DRM for Rhapsody Unlimited downloads.  Napster
2.0 uses Janus for its portable subscription, but uses WMA DRM v9 for
its Premium (subscription downloads and streams) and Light (a la carte
permament downloads) services.  In contrast, Rhapsody uses
DRM v9 for its a la carte permanent downloads only.  In turn,
those who do not run WinXP still cannot download content available
through Rhapsody Unlimited’s subscription service.

2.  Real’s press release touted that Rhapsody Unlimited users can
now buy songs and albums for 10% off, which generally works out to 89
cents/song and 8.99 dollars/album.  What they didn’t say is that
this amounts to both a price hike and a discount. Previously, one could
burn (most) songs available through Rhapsody for 79 cents.  If you
wanted a 15 song album, though, it would cost you 15x.79=11.85. 
So users who tend to buy albums will generally be pleased by the new
version, but those who tend to pick and choose individual songs
throughout the catalog will be worse off.  The new service also
provides a full 160 kbit, DRM wrapped download, but that’s not much of
an advantage; though the earlier version forced you to burn the song
directly to CD, you could easily rip back to MP3.  Also, it’s
worth noting that not all albums cost 9.99 through the Real Music Store
and thus not all albums purchased through Rhapsody Unlimited will be
8.99.

Note that this also creates a slight distinction with Napster.  Napster 2.0 Premium subscribers can buy songs in bulk “tracks packs”
to get a discount – they can buy 50 songs for 40 bucks (80 cents/song),
25 for 22 (88 cents/song), or 15 for 14 (93 cents/song), rather than
the typical cost of 99 cents/song.  Again, these prices may be
less than Rhapsody’s for those who buy singles, but more expensive for
those who buy albums.

3.  I do appreciate what Real’s done with the new version – they
added some download capacity for Unlimited, they added a music management tool, and I like the
playlist sharing.  They also are finally shifting away from Real
Player as the locus of their digital media strategy, which I think is a
really smart move.

At the same time, I still wonder whether Rhapsody’s
going to come off as too complex for many consumers.  Many
phosters remarked on this point today.  Consumers now have to sort
through 4 different services – Rhapsody 25, Real Music Store, Rhapsody
Unlimited, Rhapsody To Go – not to mention the RadioPass services.
Choice is generally good, but it can also be confusing, particularly
when each service has different DRM limitations and is compatible with
a different set of portable players and operating systems.  What’s
more, some songs are available for a la carte purchase but not
Unlimited streaming, and some songs are available for purchase and
Unlimited streaming but not Unlimited downloads. For instance, as a
Rhapsody Unlimited subscriber, I can stream the Bloc Party album
“Silent Alarm” to my heart’s content, but I still can’t download it to my
laptop (with WinXP); to do that, I need to buy it for 8.99.  I assume some songs are also available for streaming but
not purchase, and some can be purchased but are not available for
portable subscription, but I
haven’t checked this.

What’s the ultimate effect of the resulting consumer frustration?  We’ll see.