As far as I know, music by subscription services haven’t been very successful so far. These are services like Napster where you pay a monthly fee for unlimited access to an entire catalogue of songs. As long as you keep paying, you can keep listening as much as you want. I think there are two reasons why these haven’t taken off. One is that if you want to play the songs on a portable device, the device has to support whatever DRM the service is using, but iPods don’t support anything except Apple’s DRM, which Apple doesn’t let others use, and Apple doesn’t have a subscription service (yet …).

I think the other reason is that the target market isn’t quite big enough yet. Music by subscription should appeal strongly to people who are comfortable with digital music, and like to listen to a wide variety of songs, but for some reason don’t want to be involved with illegal file sharing. Almost every teenager these days is comfortable with digital music, but many of them are also quite comfortable with file sharing. Downloading music from P2P networks can be tedious and time-consuming, not to mention there’s the risk of getting sued. However, the average teenager has plenty of free time, and is probably not so worried about being sued.

However, fast-forward 15 years, and the teenager has a career, a good income, not much free time, and a reputation that he/she would like to protect. For this type of consumer there are considerable opportunity costs of illegal file sharing. Since these people are comfortable with digital music, I bet that at a reasonable price there would be quite a good demand for music by subscription. So as today’s teenagers and 20-somethings get a little older, I expect music by subscription to take off.

Related: Felix Salmon discusses a new phone from Nokia which gives free access to the Universal music catalogue for a year, and then reverts to a subscription service. Sounds like a very smart strategy to me, and timely too.