Most Music Subscriptions Too Pricey

If companies expect consumers to get excited about subscription-based music, then the monthly fees are going to need to fall below $10 a month. Research firm Parks Associates said on Thursday it found that 41 percent of people with digital music players in the U.S. said $10 was the maximum they would pay for such a service.

It gets worse in other countries. When presented with the equivalent price in their own currency, 49 percent in France, 52 percent in Germany, 56 percent in China, and 62 percent in the United Kingdom said $10 USD per month was their maximum.

Not surprisingly, based on the success of peer-to-peer music programs, a third of respondents said music services should be free.

So far, only one company offers a subscription service below that price: Yahoo. At either $4.99 USD per month for a yearly subscription or $6.99 USD monthly, Yahoo! Music Unlimited is the cheapest of any of the music services.

"Companies like Yahoo can afford to keep the price low because they have other revenue streams to subsidize their music services," Harry Wang, research analyst at Parks Associates said.

In comparison, Napster and Real's Rhapsody charge $14.95 USD per month. Given the results of the Parks Associates study, Yahoo could be opening the doors to a much larger market than its competitors.

"JupiterResearch U.S. surveys show greater interest among consumers under 24 years old in $10/monthly music subscriptions than 99-cent single purchases," notes Jupiter Research senior analyst Joe Wilcox.

"There are several reasons why subscriptions might appeal to younger consumers. For one, they may not have amassed CD collections and so not feel the same kind of ownership sensibility as GenXers or Baby Boomers," Wilcox added. "For another, many may be familiar with file trading. Music subscriptions offer the same kind of grab-it and download-it experience, but with a low-cost subscription fee, better discoverability and virtually no risk of viruses or spyware."