Thursday, February 10, 2005

iTunes Music Rentals: My Proposal

It is completely ridiculous that there is any kind of debate about whether buying (iTunes) or renting (Napster To Go/MS Janus DRM) music is the "right" way to sell it. Consumers make a rent or buy decision based on the dollars then want to spend on entertainment. Perhaps some thought at $0.99 a rental shceme was unnecessary, but I do think there is room for different pricing levels. Eventually, iTunes will add a rental scheme and that will be the end of this ridiculous discussion. I do question if Napster has hit the sweet spot with their rental scheme. $15 a month, in my little informal water cool poll, was seen as too high by all. That's $180 a year with nothing to show for it, unless you pay Napster in perpetuity. Let's look at the movie rental business. You get the movie for a small number of days. If you like what you see, you can buy it. Blockbuster charges around $4.25 for a rental, which is 21% of the cost of buying a $20 movie. This is still a pretty good value, but there is no relationship between renting and buying the movie, unlike say leaseing a car with a buyout. What if iTunes offered rental pricing on individual tracks. I propose $0.25 to rent for 5 days, no CD burns, same computer and iPod limits. That is good enough to decide if you like a song. If you then want to own that song, you pay an additional $0.80 and get the same rights as you do on regular purchased songs. Apple makes a few extra cents on a rent to buy conversion, consumers get more than the 30 second preview if they want, and ultimately more tracks get bought. For the same price as the Napster To Go subscription, I can rent 60 tracks a month with an investment to buy and I don't have the subscription fee to even think about. Not only does it introduce a new pricing tier, it seems fair to consumers because the rental fee isn't wasted, it starts you on the way to buying if you want. Obviously you can apply the same math and rights to albums. Here is my personal example. At $0.99, I don't know if it's worth it to buy the new J.Lo track Get Right. If individual track rentals existed, I would rent it for a few days to see if I can groove to it, or I hate it. I am pretty sure hate, but for a quarter, I'll take a flyer.