Saturday, March 12, 2005

"Napster To Go" is the first subscription service that allows you to move an unlimited number of songs -- which are encoded in Microsoft Windows Media (WMA) format -- to portable music players. (But not to iPods, which won't play WMA files.) RealNetworks' Rhapsody and Yahoo!'s MusicMatch are unlimited, too. This gives music fans much more flexibility and choice. All the music you want at one price. Nice, very nice.

Think of it this way. A music subscription model is like cable TV, providing a host of different channels for a monthly charge. But iTunes is like your utility bill: The more kilowatts you use, the higher the bill. Those with limited budgets are more likely to see the subscription idea as a more cost-effective way to enjoy their tunes. With a constant revenue stream from monthly paying consumers, investors will be watching to see whether this plan will move Napster toward the goal of profitability.

The popularity of the iPod is what has made iTunes successful -- not the price per tune. But the availability of unlimited music selections and cheaper yet stylish players does pose a threat. If music junkies decide the $14.95 option is the real deal, then the erosion of Apple's dominance is just a matter of time.