Zune Thoughts: Jobs Says No One Wants a Subscription

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Thursday, April 26, 2007

Jobs Says No One Wants a Subscription

Posted by David Tucker in "Zune Talk" @ 11:24 PM

"Never say never, but customers don't seem to be interested in it," Jobs told Reuters in an interview after Apple reported blow-out quarterly results. "The subscription model has failed so far."

Statements like that take me back to the heady days right at the turn of the new millennium. There was a company called Palm that made all sorts of claims about what the customers did and did not want. The customers amazingly never wanted what the company didn't offer. I see a parallel here. Everyone says Microsoft can't beat Apple at this game and Apple is invincible. No, they're not.

Two of the largest services, Napster and Rhapsody, lay claim to nearly 2.3 million subscribers. Yahoo doesn't release their numbers and I could find no information about what the Zune subsciber base is. The estimated number of people who own an MP3 player in the United States is about 60 million. About 45 million people own an iPod. That leaves us with a mere 15 million people who own something else. For the time being, I'm going to pretend that only Napster and Rhapsody exist since I have no other numbers. That means that at least 15% of non-iPod owners have a subscription service.

I wouldn't be surprised if the actual number was closer to 20%. So does no one want a subscription service? Hardly. I think so many people have bought into the "me-too" craze of owning an iPod that they've totally missed out on subscriptions simply because they don't have it available.


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