Posted September 14, 2005 at 04:21 PM by Mark Donovan
Today Sprint made good on the deal with satellite radio provider Sirius sealed in June, announcing that Vision subscribers with multimedia phones would be able to subscribe to 20 commercial free channels of music for $6.95 per month. Sirius joins MSpot and Music Choice as music providers on Sprint.
Sprint continues to stay at least one step ahead of competitors with its innovation in multimedia products. While there's much industry noise about full track download services a la iTunes--and Sprint has indicated they have one in the works for release by end of year--much less attention has been paid to streaming music services.
While technologies like EVDO make possible a pretty acceptable consumer download experience, I'm still very skeptical that we'll see these services reach any kind of mainstream success in the immediate future. The Achille's heal is no longer technology, though getting enough EVDO handsets into people's hands will take time. No the weak link is the business model.
If such a service end up being offered at $0.99 per track or even somewhere in the range of $1.25-1.50 I might end up eating these words, but early indications suggest that we'll see a business model that tries to establish a price for mobile downloads somewhere in the neighborhood of the price for master tone ringtones: above $2 per track.
The rationales for this sort of pricing include (a) "a convenience fee" for not having to wait until you get to your PC to make that impulse buy, (b) "a network fee" to compensate for all that bandwidth you're eating up as you download that new Kanye West hit, and (c) extra royalties that might need to be paid to satisfy your mobile music jones.
This last scenario comes up when the concept of "dual track downloads" is floated. The notion here is that a consumer will download a highly compressed track over the mobile network to their phone, thus taking up less bandwidth and being delivered more speedily. This track will sound just fine on the phone but won't be up to snuff for listening on the stereo at home. No problem, a high bitrate version of the track will be waiting to be picked up when you get back to your Internet connected computer. Of course this means that two mechanical copies of the song have to be made and thus you've just incurred additional fees.
In contrast, royalties on streaming music services are calculated in an entirely different way and provide much more pricing flexibility for aggregators and carriers. In terms of consumer experience, streaming music sounds great on the right handset and doesn't require an EVDO-sized pipe which, in the Sprint case, means that they can continue to leverage their 1XRTT network and immediately address a much larger audience.
Over the air music downloads are coming, but expect up-take to be slower than the hype would suggest and keep your eye on alternative models for making mobile music a reality.
