Tit for Tat: Apple vs. Yahoo! Betting Pools
Here at the D Conference, Walt Mossberg just asked Jerry Yang and David Filo about Steve Jobs' assertion on the same stage two days ago that Yahoo!'s new music service was priced below cost, and that they had a betting pool at Apple about how long it would be till Yahoo! raised their price. Steve's bet: 5 months. Jerry's reply: "Well, we have a pool at Yahoo! about how long it is before Apple introduces a subscription service. And I think David's down for 5 weeks!" That being said, Jerry did admit that perhaps their offering was an "introductory price."
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Dave,
I was looking for he same information you asked for above. Here is a pretty good rundown of at least the financials behind yahoo's service.
http://gigaom.com/2005/05/25/steve-jerry-and-the-yahoo-music-business-model/
People have always consumed music in different ways. Some people have 100's (or 1000's) of CD's. Others only have 30. Some people made mix tapes, and then mix CDs, some people just like to listen to albums.
The point? There is no one way to consume music. And for that very reason I think the subscription model will work just fine, for some people. I really don't think it is the case of one model being a winner, and the other a loser.
yay - 5 months later, Steve Jobs just won the pot - yahoo increased the price on its service :)
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dave [05.25.05 07:37 AM]
So Jobs puts in a dig about them conning customers with a price rise to come (and your music evaporates if you don't pay, and pay and pay) and they respond with a 'joke' about how the maker of the world's number one portable player may, at any stage when it suits them, enter and dominate their market simply by offering the same thing except with iPod support.
Seems like a weak respones to me.
And while I'm commenting, can any of you smart guys in the audience point me to an economic justification for Yahoo/Napster style subscription services, i.e. who benefits and who loses? The labels, the popular artists, the unknown artists, the consumer, Yahoo/Napster?