iTunes is doomed! Doomed!

Or not.

So iTunes Music Store rivals - MSN, Yahoo, Napster et al - think iTunes' dominance of the market and its 99 cents/song model will lose to the rivals' subscription model (news-leader.com).

With the top-of-the-line iPod, "You can fit 10,000 songs on it," (Napster chief Chris) Gorog says. But "to do that would cost you $10,000 if you bought the songs from Apple. With our plan, customers can get 10,000 songs on their device for $180 a year. It's an enormous value."

That's great, but it is a bit misleading. [click here to continue]

1. The average iPod owner isn't going to fill up the entire 40GB, and would probably use a bulk of the disk space for non-music stuff.
   
2. Most people have existing music collection and aren't looking to fill up their iPods with all new material.
   
3. A single is 99 cents, but most albums cost $9.90, so consumers are spending less than 99 cents are song.
   
4. With iTunes, once you buy your music, you keep it for ever. With a subscription service, you pay an additional $1 if you want to burn your songs onto a CD or copy to an MP3 player, and you lose access to your music once you end your subscription.

That said, I can see how a subcription service can be more cost effective than pay-as-you-go. If you do download more than $15 (including $5 for Microsoft's DRM) worth of songs a month, I'm better off with a subscription service - as long as I don't mind losing access to stuff I downloaded once I end my subscription. But I don't buy $180 worth of music - at least I don't try to.

"Selling 99-cent singles isn't working as a business model for us or for consumers," says Dave Goldberg, who runs Yahoo's music division. It includes Musicmatch (www.musicmatch.com)... "We sell hundreds of downloads," Goldberg says. "But we don't make money on them. Subscriptions is a much better business for us."

Well, it does seem to be working out for consumers, what with 200 million songs downloaded, and here's the thing - it doesn't have to work for Apple. They can just cover their costs and keep the profit margin low because they're not trying to make money through downloads. They're trying to sell iPods.