Mobiles not music to carrier profits?

Posted on | September 8, 2005 |

After digital cameras, the mobile may be turning it’s sight towards iPod. The phone may well become the portable music-player for the masses, relegating the iPod to the hardcore music fan. After Sony Ericsson’s Walkman series W800i, Motorola has announced the launch of Rokr - an iTunes phone, the music store software from Apple, whose iPod player dominates the portable digital music market.

Analysts expect Cingular Wireless, the biggest US mobile operator, to reveal plans to sell the new Motorola Rokr that comes with iTunes. But Cingular may not see much of a boost to its profits from selling this service.

Pricing these services could require a tough balancing act between profitability and creating widespread demand since iTunes, Apple’s high profile digital music service, charges only 99 cents a song, analysts said.

About 70 percent of the sale price for iTunes songs downloaded on computers goes to music industry players, according to Yankee, and the remainder is split almost evenly between Apple and transaction processors such as credit card companies, she said.

In a mobile music world, operators could eliminate the credit card industry’s roughly 15 percent share of the pie by charging through mobile phone bills. Yankee estimated that operators get 20 to 40 percent of revenue from ringtones.

Or phone companies may justify a wireless song premium if they give consumers new reasons to download songs wirelessly, Forrester analyst Charles Golvin said.

For example, song recognition software could be used to identify a song playing on a nearby radio and then let the user buy it through the cell phone.

Golvin believes carriers could ask for as much as $4 for a package that could include a full song, a musical ringtone and maybe some graphics all related to the same song.

Also Read: Visual Radio

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