Things are not looking good for music subscriptions at the moment. Recently Real announced a just one percent growth in their subscription revenues and now Napster have announce that it has lost 52,000 subscribers in Q2 compared to Q1. Added to that (according to their latest 10-Q SEC filing) quarterly revenues are down by over 10 percent compared to the same period in 2007 (European revenues are interestingly up by 30 percent, though currency rates will be a factor here).
Regular readers will know that I’m a fan of the concept of subscriptions (particularly subsidized ones) but skeptical of the business of premium subscriptions. The big problem for music subscriptions is that they have failed to break out of a niche. My now-colleague over at Forrester James McQuivey argues that subscriptions are the modern-day record clubs. That pretty much sums it up.
Things will start getting really messy for premium subscriptions when the free offerings like Comes With Music arrive giving at least as much as premium subscriptions (sometimes more) but for free. I’ve said it before and I’ll say it again, premium subscriptions need to be 100% DRM free to have a viable future. Sure, they’ll have to take 6 or 12 months payment upfront to protect themselves from abuse, but if they don’t it will be the rest of the industry that abuses them.
(And for those of you on Twitter you can find me there too: Mark_Mulligan)