Sprint Nextel Corp. plans to launch a full-track music download service by the holidays, an executive from the newly merged carrier said last week.
The operator looks to be the first U.S. carrier to deploy full-track offerings, which have gained steady traction among wireless users in some Asian and European markets. While details are sketchy-a spokeswoman would say only that Sprint Nextel is “evaluating a number of different music services”-sources said the operator already has inked Groove Mobile to provide the service.
Groove, which is based is Andover, Mass., is one of a handful of U.S. software developers with an early foothold in the nascent full-track mobile industry. The company boasts partnerships with the four major record labels and has launched services in six countries with as many carriers, including Orange in the United Kingdom, Norwegian operator Telenor and Singapore’s SingTel Mobile.
A Sprint executive hinted the service would be a pay-per-song model similar to other Groove-powered services in Europe and Asia. Orange, for instance, offers full songs at about $1.83 per download; most a la carte wireless services charge between $1.50 and $3 per song.
Sources indicate Sprint Nextel’s service will include a DRM-protected peer-to-peer feature that will allow friends to recommend songs by sending brief music snippets to each other. Users who want to buy the entire song could click on a link instead of drilling down through the carrier’s deck to access the title.
But while price points for ringtones have been well established-some carriers and content providers offer 30-second clips at $3 or more-the market for full-track downloads is far from clear. Most analysts say the market for personalized content like ringtones cannot be compared to the retail music industry as a whole. Digital music lovers who have become accustomed to spending less than a dollar for Web-based services like iTunes or Rhapsody may not be interested in paying a premium simply to have songs delivered to their phones.
“Ringtones are fashion, for which a premium will be paid, but music tracks are a different animal,” said Mark Donovan, vice president of products and senior analyst at M:Metrics, a mobile data usage tracking firm. “Although some people will pay $2 for the immediacy or novelty of downloading a song on their phone, this isn’t a pricing model that I see surviving over the long-term or driving a mass market.”
Profit margins for Web-based download services are notoriously thin, and it’s highly unlikely any carrier is willing to match the pay-per-song price points that have been established online. Instead of asking users to pay a premium for the privilege of on-the-go downloads, operators are beginning to explore subscription services similar to Napster’s. Carriers could charge a monthly fee for access to enormous music libraries, requiring subscribers to synch files monthly to ensure the subscription is still valid.
“Other carriers in North America and Europe are really starting to look at subscription services,” said Stan Sorensen, senior director of product management and marketing for Melodeo Inc., a Seattle-based wireless music software developer. “They’re starting to see that as being more advantageous to them.”
Melodeo powers North America’s first full-track mobile music service for Canada’s Rogers Wireless and delivers a similar offering through Spanish carrier Telefonica Moviles Espana. Melodeo, like competitor Loudeye Corp., offers a dual-download feature that can deliver tracks to mobile phones and PCs. A consumer’s ability to download a tune wirelessly and add it to his collection is worth a premium, Sorensen said.
“The type of person who is going to download a song to a handset is usually a music aficionado who wants the immediate gratification of having a song,” he explained. “They also want to take those songs and make them part” of a home music library.
Even Sorensen concedes the market for full-track downloads isn’t as ripe as the industry had hoped, however. Analysts say memory capabilities on mass-market phones must be increased for services to gain more traction, and network speeds should allow for quick and easy downloads. Perhaps the biggest roadblock, though, is simply making consumers accustomed to using their phones as portable music players.
In an effort to bridge that gap, Melodeo said last week it will offer free software allowing users to download podcasts directly to their phones. The service, which is expected to launch next month, will include thousands of podcast selections and will be free aside from carrier airtime and data charges.
“This is not a revenue play for us at all,” said Sorensen. “The thing we have realized is that the adoption curve is very slow. While inherently everybody in the industry thinks full-track is a good idea, on the end- user side there seems to be a bit of hesitation.”
