Subscription iTunes TV? Great, But It’ll Never Happen

Show of hands: Who here’s in favor of a subscription TV model offered through iTunes? Most of the people who aren’t, I’m guessing, ar

e television industry executives.

It’s rumored that Apple could bring subscription TV to iTunes, offering some sort of all-you-can-download package. The speculation comes from Piper Jaffray analyst Gene Munster ( via AppleInsider), who believes that for $30 to $40 per month, Apple could offer unlimited network and cable TV in digital file form.

In theory, this sounds like a winning idea. Sure, you’d miss live things like news and sports, but for people fed up with $60-per-month cable bills, a plan that costs half is a welcome alternative. And for Apple, a company that’s well-known for selling hardware with its software, an iTunes subscription is the perfect way to pitch Apple TV.

That leaves television service providers, such as Comcast and Time Warner Cable, and content providers, such as networks and studios — you know, the gatekeepers. They can’t like this idea.

For starters, iTunes shows don’t have ads, so that revenue goes out the window unless Apple starts offering a separate version of each show with commercials embedded. And there has to be some way to stop people from fast-forwarding through the ads, or it’s practically worthless to include them.

More importantly, a subscription iTunes plan comes dangerously close to a la carte television. If iTunes ran a subscription model, Apple could simply let customers choose the shows or networks of interest, and charge a variable amount. The problem is, a la carte jeopardizes the licensing fees that service providers pay to the networks, because customers are pay only for the content they want instead of overpaying to include everything.

In short, subscription iTunes could cut into two revenue streams for networks and studios, with less money to go around overall. Even though it cuts service providers out of the equation, I’m sure they’d get their revenge in the end by boosting the cost of Internet access.

So while I’d love to see Apple offer an alternative to cable in an iTunes subscription, I think Munster’s prediction is more fantasy than reality.