iTunes Users Want Music Subscription Service - InformationWeek
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7/14/2010
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iTunes Users Want Music Subscription Service

A minimum monthly fee of $10 for either streaming music or access to their personal music libraries on multiple devices appeals to upwards of 7 million iTunes users, according to NPD Group.

A significant number of Apple's 50 million iTunes users in the United States would seriously consider signing up for a paid subscription service that would give them access to music stored in the cloud, a survey shows.

Between 7 million and 8 million iTunes users would be willing to pay a minimum monthly fee of $10 for either streaming music or access to their personal music libraries on multiple devices, which would certainly include Apple's iPhone, iPad and iPod Touch, according to The NPD Group's "iTunes Usage Report," released Wednesday. If accessing one's personal library online was free, than the number of interested iTunes users jumps to between 13 million and 15 million.

The numbers are significant as Apple reportedly considers launching a music subscription service. Such speculation went into high gear last December when Apple bought an online music service called LaLa. Apple closed the site May 31, but has yet to announce its plans.

NPD says the number of iTunes users who would sign-up for an Apple-provided, web-based music service could rise even higher, as customers upgrade to new Internet-connected devices and experience the convenience of cloud-based services.

"If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model," NPD analyst Russ Crupnick said in a statement.

Apple currently offers digital music only for purchase through iTunes. NPD said it doesn't know what impact a subscription service would have on its current business, or whether the latter would increase overall music spending on the store.

Nevertheless, as the number of web-enabled devices grows, the demand for streaming music is expected to also increase. Forrester Research predicts the number of people subscribing to music services will increase to more than 5 million by 2014 from 2.1 million today.

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