Apple Wants to Bring the Price of a Streaming Music Subscription Down to $5

I’ll say it again: streaming music is the future. Get used to it. Yes, there are still all sorts of issues to be worked out, but this is the way things are headed over the next couple of years.

One of the biggest challenges right now is what to charge consumers for the privilege of streaming music. This is a complicated situation, tied up in the vagaries involving music licensing and the payments due for streaming songs (cf. Spotify’s pay-outs, Canada’s Tariff 8, etc.)

So what’s the right price for an all-you-can-eat streaming subscription? Most of the world has settled on $9.99 a month or approximately $120 a year. That seems pretty reasonable for access to 25 million songs.  Or is it?

Believe it or not, the average music consumer spends about $60 a year purchasing music. That’s not you or me, but when you look at the world at large, that’s the number. In fact, it might even be less than that. I’ve seen figures of $35-40 quoted in some surveys.

If we take the the number of $60/year as gospel, that means the average streaming service costs the average music consumer twice their normal music budget. And that doesn’t even begin to figure in data plans.  Ergo, a more accurate price for a streaming service might be $5 a month. At that price point, you might have faster adoption of the technology.

This is Apple’s feeling.  Can they persuade all the rightsholders to go with their pricing model? Maybe. Remember that it was Apple that convinced the music industry to unbundle albums and sell them for 99 cents on iTunes. Then again, it was Steve Jobs who did that and at last report, he was unavailable.

We’ll see what happens.