The Financial Times is reporting that Apple is in negotiations with the big record companies to offer an unlimited subscription model.   The deal would give customers access to the entire iTunes music Library in exchang efor a premium price put on Apple devices (iPod, iPhone, etc).

Nokia currently has this model and offers the music companies $80 per handset for the priveledge – to be split up based on the downloading habits of its users.  Apple, on the otherhand, is only offering $20/device.

According to FT:

One executive said the research had shown that consumers would pay a premium of up to $100 for unlimited access to music for the lifetime of the device, or a monthly fee of $7-$8 for a subscription model.

Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model.

Subscriptions would work only for its iPhone devices, where it has a monthly billing relationship with customers through the mobile phone operators offering the device, while the “comes with music” model would work with iPhones and with iPods.

The subscription models under discussion in the music industry include the provision for customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapses.
Other music groups are understood to be in talks with Nokia, which is keen to sign up as many of the major labels as possible before launching its first “comes with music” devices in the second half of this year.

 

At $20/device, it doesn’t seem likely that the record companies will bite – but there might be a sweet spot – perhaps based on storage space that both parties can agree on.  Also, Apple could offer the deal as an "option" for some customers only.  Apple is thought to make little on the sales of iTunes music and Amazon, lately, is offering music from all four big lables in DRM-free format at a cheaper price than Apple – who offers DRM free music only from EMI

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