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Success of iTunes May Be Short Lived

Subscription Services Will Replace Downloads as the Dominant Online Music Model -- While online music stores like Apple's iTunes have attracted millions of customers by selling downloads of songs or albums, changing market conditions will make subscription-based music services the dominant model for selling online music in the future. That is the conclusion of "Online Music: Will Napster Be the Next iTunes as Subscriptions Replace Downloads?" a new report from Strategy Analytics. According to this report, the shift toward subscription music services will be driven by a combination of changing consumer expectations as well as pressure from broadband service providers and record companies. In addition to changing consumer needs, the report notes that many broadband service providers prefer to offer a subscription service, such as Real Networks' Rhapsody, which generates steady monthly revenues and helps deter broadband churn. Finally, major record companies are dissatisfied with the revenue they receive from low-cost download sales, and will increasingly focus on alternative business models for selling music online.

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