Apple Inc. (AAPL): iTunes Celebrates a Decade, Faces New Challenges

iTunes “changed the music industry completely” and “gave people the power as opposed to record companies the power, in a way,” said singer-actress Jennifer Lopez.

“It has its pros and cons, I think, for artists,” she said. “I’m an artist, so I look at it from an artist point of view. But we’re in a new age. It’s like anything else. You’ve got to accept it.”

That new age includes the growing popularity of services like Spotify and Rdio, where listeners can stream music for free and can pay a set price to listen and collect songs. Industry watchers have heard rumors that an iRadio could be launched that would be something like Pandora Media Inc (NYSE:P), the popular Internet radio site.

“We don’t know all the specifics of what it might be and when it might come, but what we’ve heard so far, it will compete with those other online services,” Borchetta said.

Cue refused to comment on the speculation. He said users still favor the iTunes model compared with subscription services.

“(A premium subscription) costs $10 a month, that’s $120 a year, and most average music customers don’t spend that kind of money,” he said. “If you buy it on ownership, you own it, and a subscription model, your subscription never ends if you want to keep listening to it, so you’re paying that $10 or more for life.

“If you’re starting your music collection from existing songs, which a lot of us already have from that standpoint, you’re looking to acquire new songs, even today, at 99 cents or $1.29, or $9.99 or $7.99 for an album, it is very economical and a better value for subscription music.”

McDonald believes subscription services may become the standard.

“My generation and probably the generation after me still have this idea of ownership and pride in what we own in a record collection, and I think we always thought it spoke to who we are. I think the younger generations, and certainly the ones coming up, the idea of ownership in the way that we thought about it is irrelevant, and I think they’re just consuming content, and that’s not better or worse,” he said. “So in that way, the subscription models are going to make more sense.”

But he doesn’t count Apple Inc. (NASDAQ:AAPL) out in that future: “It may be that Apple and iTunes are going to create the best user space to own that space as well.”

The article iTunes Celebrates a Decade, Faces New Challenges originally appeared on Fool.com.

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