Apple mulling 'unlimited' iTunes plan: report
Last Updated: Wednesday, March 19, 2008 | 12:06 PM ET
CBC News
Apple Inc. is reportedly in talks with major music companies to offer customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone handheld devices.
According to a report in the Financial Times, the "all you can eat" model would be similar to the "Comes with Music" deal Nokia made with Universal Music last December, which allows users to buy a pre-programmed Nokia device with a year's unlimited access to a subscription service featuring music from Universal's catalogue.
The Financial Times said the discussions between the Cupertino, Calif.-based Apple and the major music companies hinges on how much Apple would offer its partners in exchange for access to their music libraries.
The report states that while Nokia is said to be offering $80 per handset to industry partners, Apple has so far only offered $20 per device.
For consumers, the cost of the music could either be bundled with the cost of the player or as part of a monthly subscription, although only the iPhone device already comes with a subscription.
The reported discussions, currently in the preliminary stages, would mark a major change in philosophy for Apple, which has previously maintained tight control over the prices and format of individual music or video downloads.
Apple has more than 80 per cent of the global digital music market. Its online iTunes stores are the second-largest retailer of music in the United States, trailing only Wal-Mart, according to a February study from consumer tracking firm NPD Group.
But major music companies have chafed at Apple's success, becoming more vocal about wanting their share of profits from the sale of devices they say are built on their music catalogues.
While music downloads have increased, the same NPD Group study found the increase could not offset the continuing decline in physical CD sales, leading to an overall 10 per cent decrease in music spending — to $40 US per capita from $44 US per capita among internet users.
As a result, record labels have been exploring other means of selling their music libraries.
Last fall, online retailer Amazon.com Inc. launched its own music store, reaching agreements with Universal Music Group, EMI Music Group PLC and later Warner Music to offer millions of songs without copy-protection technology.
