Several companies now already offer this style of service like napster and rhapsody. It works like a subscription service. You pay a monthly fee, and as long as you keep paying you can download as many songs as can fit on your media player. When you stop paying however, you lose all of your music. Many people like this because it is more cost-efficient if you listen to a lot of music. Although, you never have ownership rights.
Apple provides a weird twist to this normal business model. Apparently, they plan to sell iPods at a premium over the normal cost of an iPod- say an extra $100. You would then be allowed to download all the songs you want, for the life of your ipod. (Suddenly the applecare warranty is more appealing)
Apple is suggesting they split the premium among the music companies based on their market share, after taking their own cut. The question for the music labels is what plan do they think will net them the most profit over the long term. Currently they get about 9 cents for each song downloaded, would a portion of $100 really make up for the arguably 1000s of songs a user would download?
