iTunes Store customers "want to own their music," Apple CEO Steve Jobs told Reuters last night, throwing hopes that the company may soon offer a subscription-based music service into a tailspin.
As ever, Jobs was a little equivocal in his statement, saying: "Never say never, but customers don't seem to be interested in it [subscription services]," acording to a Reuters report.
He was speaking after Apple confirmed that its second (March) quarter has once again set records for company performance. Revenue reached $5.26 billion while net quarterly profit achieved $770 million in the quarter.
Apple will renegotiate its online music distribution deal with the major labels in the coming weeks – and labels are likely to urge the company to offer a subscription-based music service.
Music subscription is good business for the labels – artist royalties on subscriptions are a fraction of those achieved for full track sales, and the nature of such services offers labels regular recurring income.
Persuading Apple – which has sold 2.5 billion songs online so far – to offer a subscription service would likely equate to a large monthly cheque for record companies, music executives hope.
Apple is likely to press executives from Universal, Warner Music and Sony BMG to liberalise their digital rights management (DRM). These three labels seem increasingly isolated now: thousands of independent labels already sell songs free of DRM online through such services as eMusic.
EMI's recent decision to offer its catalogue for sale online free of rights restriction shows the major label consensus over limiting consumer rights is coming to an end.
Jobs has urged the majors to ditch DRM in favour of a truly interoperable online music sales environment which favours the consumer.
Labels are pushing back. They want flexible pricing and subscription services. Despite their pressure, Jobs doesn't think subscription services have achieved the level of interest music companies hope for, observing, "people want to own their music".
Jobs also confirmed that the majors are facing internal debate over the future of DRM, telling Reuters: "There are a lot of people in the other music companies who are very intrigued by it. They're thinking very hard about it right now."
Apple hopes that over half of the songs sold through iTunes will be made available in high-quality, DRM-free formats by the end of the year.