Billboard has an article on online subscription services. (Read article at Reuters) While Jupiter predicts good growth in the coming years, companies are finding the model difficult to reach profitability. Writer Antony Bruno thinks the business should be left to the best-known brands, which would mean there's more consolidation to come.

Said one former music subscription service executive, "There's no industry desire to see subscription services succeed. (Labels) love the idea of reoccurring revenue but they know it's replacement revenue. They recognize that unlimited access to content wherever you are whenever you want equals no CD sales."

Subscription models offer the promise of a celestial jukebox, but most consumers don't yet see the value in renting music. The iPod is not compatible with any subscription services -- and portable players are what drives digital consumption. Where the market will be in two or three years is anybody's guess. Consumers, it turns out, are as unpredictable as ever, and changes in hardware and software aren't easy to forecast.

Less than three years ago, Jupiter was so bullish on subscription models it thought that over time "revenues for digital subscription services will outpace those of digital download." The tune had changed earlier this month when Juptier issued its U.S. Digital Music Forecast. Downloads outpaced subscription services $800 million to $185 million. Subscriptions, they said, were still a niche. "For the next several years, on-demand subscription services will appeal primarily to niche audiences among music aficionados."

AOL dropped its subscription service -- while selling its subscribers to Napster -- and is going to concentrate on its advertising model. Rhapsody and Napster are in front of the competition for a couple of reasons. First, they had a first-mover advantage. Second, they have the best services. Third, they've both made partnerships (Rhapsody has partnered with Sonos and Sandisk, for example) and marketed themselves better than their competitors. While Napster and Rhapsody present music in different ways, I think they're the best. Microsoft's Zune Marketplace offers a similarly-priced subscription services. While it syncs nicely with the Zune device, the store itself lags behind Napster and Rhapsody.

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