Wednesday, July 14, 2010, 09:15 am PT (12:15 pm ET)
More than 25% of iTunes users want Apple to go to the cloudMore than a quarter of iTunes users would like to see Apple offer a free, Internet-based cloud streaming media solution, while some said they would be willing to pay for such a feature.
The new iTunes Usage Report conducted by NPD Group asked users of iTunes, as well as iPods and iPhones, to react to various music subscription models. The study found that between 7 million and 8 million iTunes users in the U.S. would have a strong interest in a paid subscription option, for about $10 a month. That would be out of an estimated 50 million iTunes users in the U>S.
For that price, consumers would like to have access to either streaming music, or access their personal music libraries on multiple devices.
If the price were free, and granted users access to stream content they had already purchased, the number of users interested is even higher. The study found that between 13 million and 15 million said they would use that functionality.
"After the service's launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music," Russ Crupnick, vice president and senior entertainment analyst for NPD Group, said. "If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per download model.
The study was based on an online panel of respondents aged 13 and older which completed 2,862 surveys in May 2010. Each respondent indicated that they had used iTunes at least once in the last three months. NPD Group said that the study carries 95 percent confidence.
Rumors of an iTunes cloud service have persisted for some time, with indications that Apple has attempted to broker a deal with content providers to allow it to stream music to connected devices. Speculation grew after Apple, late last year, purchased streaming music service Lala for $85 million.
Recent reports, however, have indicated that such a service may not come to be any time soon, as Apple continues to negotiate with content providers, who have reportedly been unwilling to budge. Apple, thus far, has not been able to obtain the necessary licenses it would need for an "iTunes.com" service.
"We don't know yet what, if any, effect these services might have on the traditional pay-per-download music model, or whether consumers will ultimately spend more on digital music overall, if or when any of these options eventually rolls out, Crupnick said.
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