Apple changes its I-tunes

Since Apple (AAPL) launched its wildly successful iTunes music store back in 2003, CEO Steve Jobs has adamantly refused to offer a monthly subscription service. If you want to buy music from iTunes, you do it either by the single or the album, that’s it. But that could soon change.

Les Ottolenghi, CEO of INTENT MediaWorks, a digital distribution system that works with peer-to-peer networks, said he’s had meetings with people from Apple and he believes the company will announce a subscription service for iTunes within the next six months. “I think Apple is seriously considering a subscription offering right now even though they will probably tell you otherwise,” he said. Spokespeople for Apple were not immediately available for comment.

So far though, it appears that Apple has made the right decision to spurn the subscription model. Rival online music stores, such as Napster (NAPS), RealNetworks’ (RNWK) Rhapsody and Yahoo’s (YHOO) Y! Music Unlimited, that offer monthly subscriptions have failed to attract a lot of interest. In fact, I wrote yesterday about how teens widely prefer iTunes to subscription-based music stores.

But Ottolenghi said that even though music subscription services have struggled against iTunes so far, he doesn’t think consumers are necessarily averse to paying monthly subscriptions. He argues that because Apple doesn’t offer a subscription product, that’s why music fans haven’t embraced the model.

Phil Leigh, a senior analyst with Inside Digital Media, an independent research firm based in Tampa, agrees with that assessment.

“The number one factor retarding the acceptance of the subscription model is the dominance of Apple. The idea of subscribing to music is new to most consumers so when the dominant player doesn’t talk about it, the idea seems out of the mainstream for most consumers,” Leigh said.

And as someone who buys from iTunes pretty frequently, I’d support a subscription model. For $15 a month, all I’d need to do is buy two albums a month to justify a subscription. I think many consumers would be amenable to paying a flat fee for unlimited downloads on iTunes.

That said, Leigh isn’t so sure that Apple is willing to do an about-face on subscriptions just yet…even though the record labels clearly would be overjoyed if Apple did begin to offer a monthly iTunes plan.

“Record labels would like a subscription service. They, like anyone else, like recurring revenue. Ringing the cash register every month is a beautiful way to run a business,” Leigh said. “But I don’t think they are going to do it because Jobs has said he’s against it and I believe that most of the time we should take people at face value unless we have compelling evidence not to.”

Plus, chatter about an iTunes subscription service is hardly new. BusinessWeek wrote about the possibility of a subscription model in August 2005 and CNET revisited the speculation last May.

Still, Ottolenghi was fairly confident that Apple will soon reveal an iTunes subscription service. He thinks Apple realizes that in order to attract more customers, particularly those that are using peer-to-peer file sharing services, Apple has to be more flexible.

“With peer-to-peer, there are 2.5 billion downloads per month compared to Apple taking three years to sell 1 billion songs on iTunes. That’s a big difference,” he said.

So maybe, just maybe, Steve Jobs will introduce an “all you can eat” iTunes 8.0 in the near future.