Stories at CNN, Ars Technica, and CNET are covering the fact that Apple is working on a plan that would allow unlimited “free” access to the iTunes music library — if users paid more up-front for their iPod devices.

This sounds interesting, but it seems like an up-front charge (when you buy the device, as a one-time fee) might have some legal (not to mention business viability) challenges associated with it. Now, if they were to go with a Zune-like monthly subscription model, that would be a whole different story. It would actually make a lot of sense.

Group-think/conventional wisdom seems to be that since the average iPod/Phone user spends about $20 total on music through the iTunes store, it would make sense to charge everyone that much up front. Others say something more like $80 is more reasonable. I think they’re all wrong: Charge me $20 up front, and I will do everything I can to maximize — in a big way — that mandatory investment. People only spend an average of $20 because they have to keep paying. Charge that up front and grant them unlimited access, and they’ll download more music than you can possibly imagine.

That’s where the Zune Pass idea is a better one. Recurring monthly revenue of a predictable, fixed amount (which is great from a business standpoint) and a happy customer base. I just don’t see a one-time fixed fee model holding water for very long. But then again, if your intent (hypothetically) is to launch a firestorm campaign to (further) monopolize the market and then dump it as unviable… well, you might actually succeed at one goal by failing at another. Just a thought. :)

A few days ago, we declared iPod the ultimate winner with no portable music players to take it down. However, we need to make an exception for Microsoft. As surprising as it is, at CES 2008, Microsoft’s Zune is really starting to emerge as a serious threat to Apple’s crown jewel. Sure, it’s not going to capture the market rapidly and growth will be gradual, but Microsoft has the right ingredients. Just when Microsoft announced Xbox and its official entry in the gaming space, everybody laughed at the idea. And the joke become even hilarious after Microsoft announced its loss on a per unit basis, and how wide that was. Look at Xbox 360 now and the ever-successful Halo franchise that has made Microsoft a running star in gaming consoles. The gaming industry would now feel empty without Microsoft. After interviewing with Zune reps at CES, we got the same sense of ongoing developments and a long-term strategy from them.

Naturally, they weren’t as overconfident this year as they were last year at CES 2007. In fact, they were more appreciative of Apple and its developments. We think the technology industry was more humble this year for whatever reason, and a lot of companies were giving credit to their competitors. And justifiably so. If a particular company has done well, it deserves to be credited. It doesn’t matter if it’s a competitor or not. We are glad the technology sector is starting to become more humble with a clear acceptance for its competitors as industry movers and shakers.

Microsoft displayed a new version of its Zune social networking site, and it was impressive. The company is looking to overhaul its social networking site at least once a year with a substantial list of features. On top of that, they will continue to update it with incremental feature updates once every quarter. These will be “soft” upgrades.

The company continues to be on a track to personalize their music players with very intricate designs, and Microsoft acknowledged it might let users create their own designs, upload them and have them printed and shipped accordingly. It doesn’t get any better than this.

The world’s number two music maker was quiet about its Zune developments, but considering how rapidly Microsoft is learning from its previous mistakes, we are hopeful of their capabilities. It can only get better for Microsoft from this point forward, or at least we hope.

[Gundeep Hora]

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