Apple is rumoured to be in negotiations with major music labels to launch a new business model for its iTunes store that would see users provided with free access to music in return for paying premium purchase price for its iPod and iPhone products. The dominance of iTunes is facing threats from MySpaces move towards an online service and growing dissatisfaction from music labels over its pricing and DRM structure, with the promise of free music seen as a means of generating interest in both label releases and new versions of Apples music players.
The move would mimic that of Nokias deal with Universal Music Group and other partners, with up to USD80 per handset passed on to participating labels, based on their prominence. Apple is believed to be offering around USD20 for each device, a price that is believed to be stalling negotiations.
If unable to push a per-handset open deal, Apple is rumoured to be considering a subscription model for the iPhone that would see a monthly fee charged through mobile operator partners, allowing users to keep a certain number of tracks per year even if a subscription lapses or a given device is no longer used.
Apple declined to comment on any negotiations.