Apple software subscriptions in the future?

[David Mathis]

Is it possible that the next OS X will be a start of this? Will this help Linux? I am considering Resolve as an alternative just in case.

[Oliver Peters]

[David Mathis] “Is it possible that the next OS X will be a start of this?”

A different spin on this is that Apple could also seriously add movies into the model. That, rather than applications.

– Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com

[Tim Wilson]

[Oliver Peters] “Apple has fully embraced the subscription model with Apple Music”

And they were years late doing so. So late that it was worth $3 billion to buy Beats to accelerate the process.

The absences of monthly subscriptions had undermined the fundamental soundness of their music business. (See what I did there?) They NEEDED to add subscription model or watch their music business fall further and further away from relevance.

I’m not sure that some people get how far behind Spotify iTunes had fallen, and how much that decline was accelerating. If Apple wanted to stay in the music business, they HAD to make this move.

iTunes sales aren’t dead any more than CDs are dead — but the death spiral has been underway for a long time. Apple’s not in the “riding the death spiral” business.

[Oliver Peters] ” Apple could also seriously add movies into the model.”

Yes. They’ve saddled up on Spotify. Netflix is next.

Why “next,” even though Netflix decimated Apple’s iTunes movie and TV sales before Spotify torpedoed iTunes music sales?

(I don’t know if folks have fully appreciated that Spotify passed iTunes. The Beats purchase was IMPERATIVE unless Apple get this to the finish line more quickly than was happening.)

The issue has historically been that the movie and TV studio side of the same conglomerates with music labels HATE Apple. They phrase I heard many times is “We’re not going to let ourselves get iTuned again.” Apple TV could have taken off years ago if studios hadn’t been burned so badly on the music side.

So maybe “fear” is a better word…but I think “hate” counts. I do think that the hate was more directed at Jobs personally, which is why it’s not at all surprising to me that Tim Cook is growing Apple dramatically more quickly than Steve ever could have. You know that Apple’s sales have doubled and profits tripled with Tim at the helm, right? The sharpest uptick in Apple history. He’s a better business man AND a nicer guy….and nice guys can in fact win.

To get Apple Music across the finish line, though, the OTHER need Apple had wasn’t technological, but personal. Yeah, Tim Cook was a step in the right direction away from Jobs, but it took Jimmy Iovine at Beats (producer for Springsteen and Stevie Nicks, head of the most influential and profitable record label of his era) to assuage the fears of studios who’d been burned by Apple once and had no interest in another round.

That’s going to be one of the logjams for Apple’s take on Netflix. Tim Cook MIGHT be the guy whose relationship with the studios is enough to make them let Apple off the mat…because really, Netflix and even Redbox have been as much an insurance policy for studios against letting themselves get backed into a corner by Apple again. If potential profit was enough to overcome that combination of fear and hatred, it would have happened already. The creation of and “Apple-flix” model may in fact need a Jimmy Iovine.

This is definitely another area where Apple is years behind, and they will either adopt or forever surrender to accelerating, irrevocable irrelevance ….which just doesn’t sound likely.

[Oliver Peters] “rather than applications.”

Their software model appears to have become the exact opposite of all this. Buy once for next to nothing, and get every upgrade free for….well, for at least for the next four years and counting. I don’t see any sign that they’re going to ask for a single upgrade payment, much less monthly payments.

For software.

[Andrew Kimery]

[Oliver Peters] “Something to consider… Now that Apple has fully embraced the subscription model with Apple Music, could that change their approach to software down the road?”

I don’t see what Apple would have to gain. Users like the ridiculously low prices for the software and it has to run on a Mac so Apple gets it’s hardware sale. They already give away their OS…

[Tim Wilson] ” Apple TV could have taken off years ago if studios hadn’t been burned so badly on the music side.”

The other wrinkle here is that music distribution is much less of a rats nest than movie/TV distribution and the iTMS was basically a natural progression of music distribution to a new medium. Apple is a middle man (like Walmart or Target) selling music but the medium is a digital file as opposed to a CD, cassette tape, record or 8-track. With TV you have a lot more players in the mix (the networks, local TV stations, cable/sat companies, etc.,) and the business is ad based. The music labels want to sell songs to consumers but the networks want to sell an audience to advertisers. AFAIK Nielsen still hasn’t hammered out a comprehensive rating system for streaming yet and until that happens I don’t think we are going to see any great leaps and bounds in live TV going to IPTV.

[Bill Davis]

[Tim Wilson] “but it took Jimmy Iovine at Beats (producer for Springsteen and Stevie Nicks, head of the most influential and profitable record label of his era) to assuage the fears of studios who’d been burned by Apple once and had no interest in another round.”

Burned? BURNED?

IIRC at that time, the record labels were getting DESTROYED by Napster et al. And they didn’t have the brains to do anything but file a small flurry of lawsuits against teenagers to stop the hemorrhaging.

Jobs, (like him or not) figured out that ONLY by offering the music lovers of the world the opportunity to get LEGAL at a sensible price ($.99 a price that nobody could bitch much about) was there any hope of turning the corner and creating a new market for music.

Those same recored company execs had created a model of $12 to $15 for an LP containing, at best, 1 or 2 good songs, and had then proceeded to push the price higher and higher and higher over the years..

I agree the music industry hated Jobs – largely because he showed how utterly lame their bloated and rigged industry had become. Remember when after iTunes had proved the new model, the record label guys forced Jobs to push iTunes prices up to the the ridiculous single song price of $1:29 simply because they couldn’t get their brains around the fact that they they weren’t selling RECORDS anymore. $1.29 is a classic “rack jobbers” price. (the old retail model from back when records were put on racks in record stores.)

The record industry was the most corrupt cesspool in retail back in the day.

All power execs and lawyers. Thats why you ended up with Michael Jackson owning the Betatles catalog and guys like John Fogerty not being able to perform for decades because all the money would go to the record company toads rather to the performers.

I’m sure they FELT that Apple had “burned” them. If they had any brains, they’d erect a statue to him for saving the whole damn modern music business.

And not with the technology. But with the concept that if you treat customers with RESPECT, (something no record company had EVER even considered, IMO) they will buy more stuff from you.

My 2 cents.

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[James Culbertson]

[Tim Wilson] “Their software model appears to have become the exact opposite of all this. Buy once for next to nothing, and get every upgrade free for….well, for at least for the next four years and counting. I don’t see any sign that they’re going to ask for a single upgrade payment, much less monthly payments.”

There will be no software subscriptions until they are no longer making good “subscription” money off their hardware… how often have you purchased a new mac or laptop in the last 10 years?

[Walter Soyka]

[James Culbertson] “There will be no software subscriptions until they are no longer making good “subscription” money off their hardware… how often have you purchased a new mac or laptop in the last 10 years?”

This, plus phones and iPads and now headphones.

Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive   |   RenderBreak [blog]   |   Profile [LinkedIn]

[Andrew Kimery]

[Bill Davis] “Burned? BURNED? “

Yeah, burned. Apple turned into an 800lb guerrilla retailer that no competitor could match (not even Walmart) which is why Amazon was able to sign a deal with the labels to sell DRM free music before Apple could. The labels were trying to get another player into the game. Obviously the labels were looking out for themselves, but as a customer I was glad to see Amazon get in on the action because they are one of the few companies that can be a legit competitor with Apple.

[Bill Davis]

Sure, remember back in the old days when competition pushed prices down?

These days, sometimes it seems the function of competition is to make arbitrary price increases feel “normal” because everyone is doing it.

See gas prices.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com – video editing curriculum complete with licensed practice content.

[Andrew Kimery]

[Bill Davis] “These days, sometimes it seems the function of competition is to make arbitrary price increases feel “normal” because everyone is doing it. “

Why compete when colluding is much easier and more profitable? 😉

But on a somewhat serious note, I wonder how lack of physical inventory plays into pricing and competition. By that I mean, a store (especially a brick and mortar store) selling physical goods is motivated to move those goods because they are taking up space (which is finite and costs money). Even if that means eventually selling something at a break even point (or a loss) they’ll do it just to get rid of it. Files sitting on a server though is a totally different ball game. A file on a server can be ‘distributed’ an unlimited amount of times and if the hosting company is running out of space they just add more storage.

Sure, if you want you can still have sales to try and steal customers from the competition, but the inherent pressure of ‘we have to move this inventory NOW because new inventory is arriving soon and we don’t have room for everything’ is gone. If you are dealing in downloads only you also don’t have to worry about the 2nd hand market because, at least right now in the US, you can’t transfer ownership of file-based media like you can physical media. That’s one of the things at the forefront of console gaming right now. While downloading a game is more convenient than buying the disc, gamers are afraid of the long term consequences of seceding even more power to game developers/publishers and console makers.