iTunes phone song sales may bring slim profits for mobile service providers

“Cell phones may become the new way for the iPod masses to download and listen to music in the coming years, but wireless companies may not see much of a boost to their profits from selling such services,” Sinead Carew reports for Reuters. “The biggest U.S. mobile service companies are considering selling phones that can play songs and some have plans to deliver music to phones over the wireless airwaves, in a bid to boost revenue as phone call prices drop.”

“Analysts expect Cingular Wireless, the biggest U.S. mobile service, to reveal plans on Wednesday to sell a new Motorola Inc. phone that comes with iTunes, the music store software from Apple Computer Inc., whose iPod player dominates the portable digital music market,” Carew reports. “At least initially, Cingular is expected to let users transfer songs to the phone from computers rather than through wireless download services. The No. 2 and No. 3 U.S. mobile services Verizon Wireless and Sprint Nextel Corp. have already said they are planning mobile music download services.”

Carew reports, “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. Sprint has said it believes wireless customers, which already pay as much as $3 for ringtones, will pay more for song downloads on-the-go than for downloads to their computer.”

“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,” Carew reports. “Carriers’ options could include bypassing Apple by setting up a rival to iTunes, or going with other partners such as RealNetworks Inc. or Napster Inc., which control less of the music download market than Apple, according to Yankee.”

Carew reports, “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.”

Full article here.

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16 Comments

  1. If Apple is going to enter a new market, you can bet it WON’T be with a lame concept akin to electronically duct taping two existing devices. These “analysts” are the most unimaginative lot on the planet. These types give “freedom of the press” quite a beating.

  2. Moto iPhone customers could only download independent artist’s
    songs via iTunes to thier iPhones. This would give these artists
    a viable platform to reach an audience. ” width=”19″ height=”19″ alt=”big surprise” style=”border:0;” />

    CT ======]————– feeling the PRESSURE

  3. You know all this talk about cell phones and music, it’s not big of a deal really.

    People buy cell phones to talk mainly and second to do other things.

    Downloading songs via phone is not going to be a pleasant experience, a few ringtones here and there is nothing.

    iTMS users download hundreds if not thousands of songs.

    Now what is going to sell Moto phones is in fact all those people who have iTMS music and want to take it with them may indeed decide to get a Moto phone instead of something else.

    That’s the position I’m in.

    But other factors like price, availalbility and service is what I look for first in a cell phone, not if I can put iTMS songs on it. I got several iPods for that.

    I think what Steve did is this, he has something ELSE going on and the Moto iTunes phone is just the best man at the wedding.

    I think Apple really needs to revamp their .Mac service to allow easy editing of peoples webpages like a pagelayout program and provide DSL service.

    I would also like to see the new iPods with a slightly larger screen, a stylus to use iTMS directly on the iPod, a DSL modem either inside or part of docking station.

    This way I can give a whole solution to a friend who likes music, but doesn’t like computers.

    The iPod is the store, with a option accessories like a cd burner!

    Right now people have to buy a minimum $500 Mac or a simular PC and a iPod.

    Apple would sell billions if they would make a iPod like this.

    Will Steve just GET IT or will he continue to require a computer and only sell iPods to geeks?

  4. NO ONE CARES IF THE CELL PHONE COMAPNIES MAKE ANY MORE MONEY ON SONG SALES! SCREW THEM!

    People just want devices that work – and since we’re doing it, i’m sure you’ll be happy. We made the iPod for users, and not music execs. If you think we’ll not do the same with the iPod phone, well.. you must not be watching how we operate..

  5. aren’t the target. It’s the type of device some may cherish, and others
    won’t miss if they leave it behind as a forget me not “wherever”.

    What, battery is too low for my “urgent” phone call? Justifies an instant
    fit in some circles…you need something with value and very uniquely
    put together to harness that kind of distinction. I’m watching.

    ” width=”19″ height=”19″ alt=”smirk” style=”border:0;” />

    CT ======]————– I like to find the right fit

  6. give it to your daughter, when she’s lost interest in it or it disappears
    for some unknown reason…something *disruptive* is going on. ” width=”19″ height=”19″ alt=”LOL” style=”border:0;” />

    CT ======]————– Mushroom effect

  7. Moronic article about moronic business dweebs.

    I have never bought a ring tone, but if I did, I might buy one. Maybe even two if I were a complete buffoon. But I own tens of thousands of musical tracks on CDs. If these bungling bimbos can’t see the difference between pricing pressures in the CD and ringtone markets, they deserve the dismal obscurity to which history will relegate them.

    MDN Magic Word is waiting, as in waiting for Apple to cure the pathological cell phone market.

  8. Steve has already mentioned in his interview that “public is not that stupid to buy for $2 over the telephone”. But, to prove the point, he will make that as an option and pay 25 cents (or even 50 cents) to the carriers per downloaded song. In less than a year, the cellphone carriers will realize that it is a worthless bargain as people simply don’t buy songs over the phone.

    But, then by doing that, the cell phone companies will market the iPod phones in the hope that they will get some revenue; it will simply be a free marketing for the iPod phones.

    Enjoy.

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