iTunes Subscription Buzz Is Back

The Mac rumor sites are lit up again about whether Apple (NASDAQ: AAPL) plans to unveil an iTunes subscription service next month.

The latest rumor is courtesy of an anonymous tip supplied to several of the what’s-Steve-Jobs-up-to-next blogs. One involves a “late September Apple Event,” which purportedly will see the introduction of two music subscription plans and a host of upgrades to MobileMe, the cloud-based service to sync applications and devices across the Apple product family. The service got off to a rocky start with its introduction last month.

Under the rumored plan, unlimited access to half of Apple’s iTunes store for one year would cost $129.99. Bundling the service with MobileMe would run $179.99, or $99 for current MobileMe customers. An option to “buy and keep” songs would also be available to subscribers; the current a la carte store would continue to operate as it does now.

The MobileMe upgrades would allow iPhone and iPod Touch users to access the iDisk cloud storage, and enable one-button syncing to MobileMe.

Rumors of Apple’s entree into a Rhapsody-like subscription service, though not new, would signal a major strategic shift in Apple’s digital music strategy. The overwhelming popularity of its iTunes store and the ubiquitous iPod devices have already given Apple the top spot in U.S. music retail sales, according
to NPD Group.

But for all of Apple’s success in retail, there are serious questions about the basic viability of the business model of the music-subscription service.

“I think from a consumer standpoint, what we see, subscription has not gotten the kind of traction that any of the companies had hoped for,” Russ Crupnick, NPD’s vice president and senior entertainment analyst, told

“Nobody has been able to make that model work as successfully as they hoped,” he added. “It’s not a rental model — consumers want to buy something and own it.”

Nevertheless, the rumor mill is churning again about Apple making the jump into a subscription business with its characteristic swagger. The new service, understood to come with a transmission speed of 256 Kbps, was presented to the rumor sites with the tagline “highest quality digital music subscription service ever.”

The latest batch of speculation follows closely on reports that found a new crop of iPods is due out next month, based largely on dwindling retail supplies of existing models that are not getting replenished.

Despite the absence of support from the major record labels (except EMI), Apple has not seen any serious threat from a spate of hungry competitors. Amazon, which launched its MP3 store last September and now offers the catalogs of the Big Four labels free of copy and usage restrictions, currently holds the No. 4 spot on NPD’s ranking of music retailers, though that ranking also accounts for CD sales on Amazon’s main store.

Most recently, social networking giant MySpace announced an ambitious music service offering both streaming music and MP3 downloads, also free of copy restrictions.

The iTunes-subscription speculation appears in nearly identical form on three popular rumor sites. While that suggests that they likely came from the same source, it should not, in any way, lend them more credibility than they deserve.

Loyal followers of Mac rumors know that the gossip churn rarely pans out as reported, so even the most wide-eyed of Apple enthusiasts understand that stories like these can strain the bounds of credulity. They are often picked up because the Mac-heads want, more than believe, them to be true. The sites admit as much themselves.

The Unofficial Apple Weblog begins its story thusly: “By definition, nearly all tips we receive about Apple future product intros are wrong.”

Macrumors leads the closing paragraph of its piece with the following: “Readers should note that anonymous submissions made to multiple rumor sites are generally false, but…”

An Apple spokesman declined comment, citing a familiar Silicon Valley refrain: “We do not comment on rumors and speculation.”

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