Survey: iTunes users have ‘strong interest’ in paid subscriptions

July 14th, 2010 by Chris Hogg Leave a reply »

In the world of music, iTunes-style micropayments have emerged as the predominant method of paying for music online today. However, according to a new survey, people may also be willing to pay a monthly subscription fee to access their music online.

According to a survey released today by marketing researcher NPD Group, as many as seven or eight million American iTunes users say they would pay a minimum $10 monthly subscription fee if they could stream or access their music libraries online from multiple devices.

NPD estimates there are 50 million American iTunes users and says a subscription model that offers iTunes users free access to their own music libraries online could attract as many as 13 to 15 million subscribers.

If Apple were to generate subscription revenue in addition to its a-la-carte sales, it could be a big win for the company’s bottom line. Morgan Stanley Internet analyst Mary Meeker estimates iTunes accounts for about 10 percent of Apple’s overall revenue.

“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,” Russ Crupnick, vice president and senior entertainment analyst for The NPD Group, said in a press release. “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’s “iTunes Usage Report” surveyed Apple iTunes, iPod, iPhone, and iPod Touch users to find out how they would feel about music subscription-models. More than 25 percent of respondents expressed a strong interest in a free cloud-based option and many said they would pay to access their music from multiple platforms.

“We don’t yet know what, if any, effect these services might have on the traditional pay-per-download music model, or whether consumers will ultimately spend more on digital music overall, if or when any of these options eventually rolls out,” Crupnick said.

The findings are based on a May 2010 survey of 3,862 members of NPD’s online panel.

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