CAMBRIDGE, Mass.-Operators looking to cash in on mobile music services must first establish a viable business model, according to a report from Pyramid Research.
While the buzz surrounding wireless music grows deafening, carriers will have to fight hard to strike workable deals with publishers and vendors to provide over-the-air download services. Given the success of iTunes’ $1-per-song model, operators will have to somehow price downloads at a “slight premium” even as they add another link to the value chain, the report warned.
“Mobile carriers will wield all their power to become a key part of the value chain,” said Nick Holland, a Pyramid senior analyst. “Their main leverage is handset subsidization, but that’s a vulnerable leverage as handset manufacturers will increasingly partner with publishers like iTunes, Napster and Real Rhapsody, cutting operators out of the loop.”
Indeed, Apple Computer Inc. fired one of the first shots in the looming battle for mobile music services last week, launching Motorola’s much-hyped ROKR for Cingular Wireless subscribers. The handset synchs with Apple’s iTunes software, but doesn’t support a mobile music download service and can hold only 100 songs. Music-friendly phones must offer more memory and better functionality before wireless handsets become a viable alternative to digital music players, Holland said.
