Subscription Services (updated) [8:23 am]
Yahoo Inc. will cease operating its online music subscription service and switch its customers to RealNetworks Inc.s Rhapsody music service as part of a new deal between the companies that calls for Yahoo to promote Rhapsody on its site.
The deal leaves Rhapsody, Napster and Microsoft’s Zune Pass as the last subscription services standing, with Zune Pass being available only to consumers who buy a Zune MP3 player. Previous casualties include MTV’s Urge, AOL’s MusicNet, Sony Music and Universal Music Group’s Pressplay, and Circuit City’s MusicNow. Put another way, some of the biggest names on the Web, the music industry and electronics retailing have ventured into the subscription music market, only to be forced into retreat.
Record company executives have contended for years that subscriptions — which charge users a flat monthly fee to play, but not keep, an unlimited amount of music — were the future of the business. [...] But as Yahoo’s retreat makes clear, a powerful brand isn’t enough to persuade masses of consumers to sign on.
[...] [Yahoo's Ian] Rogers illuminated one of the central problems for subscription services: They’re too complex technologically for most consumers. The electronic locks used by subscription services make them incompatible with iPods, the most popular MP3 players on the planet. That’s strike one. The locks also make it difficult to move music around the home, given how few stereos or boom boxes can support them. That’s strike two. And even the portable players that are supposed to be compatible with subscription services can run into trouble handling their complex software, resulting in freezes, resets and other maddening malfunctions. That’s strike three.