An analyst is predicting that subscription music services will outpace downloads by 2009, leading some to speculate that Apple will succumb to offering a subscription service.
Jupiter Research analyst David Card expects subscriptions to outpace downloads by 2009, generating $890 million in revenues versus $800 million for download sales, reports Reuters.
He said: "We think many millions of people will be buying 5 to 15 downloads per year versus fewer, a few million, who will spend $10 to $15 a month for subscriptions. Subscriptions are a great thing for real fans because you get access to a lot of music. The appeal is it's on-demand. As long as you keep paying, its all there."
Card thinks that Apple will also offer a subscription service eventually. "The only reason they have iTunes is to sell iPods. If it turns out subscription services are important to sell iPods, they'll probably get into that business."
Inside Digital Media analyst Phil Leigh thinks that if Apple submits and offers a subscription service it may avoid losing its market share to Napster and others.
He said: "Apple will probably lose some market share over the next few years, but if they offer subscriptions, I think that loss of market share will be less."
Reuters suggests that investors expect great things from Napster, indicating that it is the most highly valued of five stocks in the S&P Home Entertainment index. The report explains: "With a price-to-sales ratio of 4.93, Napster has nearly double the price-to-sales comparison of digital music leader Apple, with a ratio of 2.65."
The non-profitability of Apple's iTunes Music service is noted. Even though Apple is selling the lion's share of downloads – more than 300 million to date – its download model runs at about break even.