Survey: iTunes users will pay for cloud service

As music fans wait for Apple and Google to come out with cloud services, NPD says there's definitely a market for them.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
3 min read

The NPD Group, one of tech's best known research groups, says Apple fans would be willing to pay for subscription and cloud-based music services on the iTunes platform.

NPD recently surveyed users of iTunes, iPod, iPhone, and iPod Touch about their reactions to various music subscription-model concepts. The results of NPD's survey, called the "iTunes Usage Report," showed that more than a quarter of respondents "expressed strong interest" in a free cloud-based music option. The research firm said "many others were willing to pay" subscription fees to "access their own music libraries from multiple devices and platforms."

NPD asked for reactions to an iTunes model that offered free streaming of their own iTunes music libraries and then asked the same question about multiple paid services. Those models offered music subscriptions and combinations of music streaming, downloads, and universal Web access to the consumer's music library.

"Between 7 million and 8 million iTunes users in the U.S. would have strong interest in one of the paid subscription options," NPD concluded. "These consumers indicated a willingness to pay a minimum monthly fee of $10--either for streaming music or access to their personal music libraries on multiple devices."

The "cloud" is the term used to describe services and storage provided via the Internet. Apple is working on a cloud music service, and CNET reported in January that iTunes representatives had spoken to executives from the four largest recording companies--Universal Music Group, Sony Music Entertainment, Warner Music Group, and EMI Music--about launching the service.

"We don't yet know what, if any, effect these services might have on the traditional pay-per-download music model."
--NPD Group

Just recently, a spate of rumors has cropped up, asserting Apple is close to launching a cloud service that would feature both music and video. But music industry sources told CNET that Apple has yet to discuss many details with the top music labels so any launch is likely still months away.

While details about the new service are few, sources from both the music and movie sectors told me that Apple's vision is to build proverbial digital shelves where iTunes users can store their media. One of the sources said Apple execs "want to eliminate the hard drive."

Meanwhile, Google, one of Apple's smartphone rivals, is also working on a cloud music service.

NPD's research shows that the public has its collective head in the cloud. NPD said there are 50 million iTunes users in the United States. If iTunes were to offer people free access to their own music libraries, NPD predicts, the service could attract as many as 15 million subscribers.

"After the service's launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music," Russ Crupnick, senior entertainment analyst for NPD, said in a statement. "If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model."

While it certainly sounds impressive that Apple could grab 66 percent of the subscription market in one year, NPD also said researchers there "don't yet know what, if any, effect these services might have on the traditional pay-per-download music model."