NPD has released survey results that point to a huge interest in an iTunes subscription service, which, in 2010 language, would be called a "cloud service." NPD believes there is a market of about 8 million possible subscribers in the U.S. alone. Those subscribers indicated they would be willing to pay at least $10 per month, which would translate into the next billion-dollar opportunity for Apple
"Between seven million and eight million iTunes users in the U.S. would have strong interest in one of the paid subscription options, according to the report. These consumers indicated a willingness to pay a minimum monthly fee of $10 -- either for streaming music or access to their personal music libraries on multiple devices," NPD said. NPD estimates that there are 50 million iTunes users in the U.S. According to NPD's music industry research, a model that offers iTunes users free access to their own music libraries would attract in the range of 13 to 15 million subscribers.
"After the service's launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music," said Russ Crupnick, vice president and senior entertainment analyst for The NPD Group. "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."
An iTunes subscription model has been rumored to be in the works for at least three years. We have heard everything from a free 1-year subscription that would be included with every new iPod and iPhone to rather expensive services that would cost up to $30 per month. $10 sounds reasonable for an all-you-can-eat plan, but we are talking about an extra $120 per year on top of a possibly already expensive iPhone service contract, and we doubt that Apple would include free downloads for that price. In the end, it all comes down to one question: How much are you willing to pay?
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