Month: September

Full Text:

There has been a lot of speculation as to why Best Buy purchased the struggling Napster for $121 million. The truth is that Best Buy is using the acquisition as a part of a broader platform to offer digital content and to leverage its market share in consumer electronics by bundling services that bring in recurring monthly revenue. They have already done this over the past few years with services like TiVo, DirecTV, and XM Radio. With Napster, Best Buy can persuade makers of consumer electronics like stereos, TVs, and computers to embed the service in their products in return for better shelf space and promotional support. They already have a lot of leverage in this area. Best Buy also may expand the platform beyond music, to movies and other digital content. An area to watch is mobile phones. The store recently opened new Mobile Shops and is experiencing increased mobile phone sales by 50%. If Best Buy increases its market share in this sector, it could wield the same leverage over mobile phone manufacturers and wireless operators to include Napster mobile services. Major labels are very excited about the acquisition and see it as a great way to drive sales in new ways on a lot of devices.

Month: September

Full Text:

Due to "format fatigue" and lack of revenue coming in from the ringtone and ringback market, major labels are backing what they see as the future of the mobile music market: full-song downloads. The music industry wants to turn phones into a platform to enjoy music and not just showcase one's taste. Aside from being able to the wind out of iTunes' sails somewhat, the main reason for this is money. Wireless data revenue has been on the rise, but the amount of revenue gained from selling content via phone fell 1%, meaning people are paying to use basic wireless data services like Web browsers and are not paying an extra fee to use the same connection to buy and download content. This is where the mobile entertainment industry means to redeem themselves with this new generation of phones for full-song downloads. Nokia's Comes With Music phone is set for release in the UK this October. It comes with a one-year unlimited music subscription service in the cost of the mobile phone that supports it. MyPlay is a mobile music download store created by Sony BMG with UK operator O2. Verizon's partnership with Rhapsody is the first for a mobile service to link up with an already branded music service provider and in an integrated way.

Month: July

Full Text:

Rhapsody and Napster are hoping their mobile phone-compatible services will change their fortunes in the music subscription business, but that has yet to be seen. The downloading of music has dwarfed the subscription service recently. Napster's partnership with AT&T since late 2006 has seen little change in the company's subscriber base and the service is only available with other-the-air downloads on one phone model, while the side-loading service is available on just a few others. Napster is also one of several music services available for AT&T phones. This is where Rhapsody and Verizon have the upper hand. Rhapsody is the default music service for Verizon phones and is compatible with ten kinds of phones. Verizon can also add the cost of the subscription to their phone bill, something AT&T has not been able to do. Verizon is far ahead of its rivals and is working to transform Rhapsody's business. The problem is that the music subscription business has always had more potential than success. Rhapsody is great for sophisticated music lovers, but hasn't had mass-marketing appeal yet.

Month: May

Full Text:

Apple appears to be set to upgrade their iPhone to a 3rd generation. The product is easily the phone with the biggest impact on mobile music on the market to date. While only 6.7% of mobile phone users listen to music on their phone, 74.1% of iPhone customers use their iPhone as an MP3 player. Most of these consumers transfer their songs via computer connection. The new iPhone supposedly may be able to use cellular networks to download music, rather than current iPhones that use a slower, older network for downloading tracks. This would give faster downloading and a much larger coverage to customers, and probably increase music downloading more significantly. While Apple continues to run with its successful product, other phone companies try to keep up. Smart phone company Research in Motion (RIM), who makes Blackberry, owns the largest share of the smart phone market, but Apple is closing in. In an effort to fight off Apple, the two latest Blackberrys, the Pearl and the Curve, are aimed at the high-end music market. They each have available applications such as MediaGuide (service that identifies songs on the radio), streaming XM radio, and a pending full-track downloading service from PureTracks. Verizon is also trying to make music more widely available for all of its phones. Teaming up with Rhapsody and its newly acquired Urge music service from MTV, Verizon is the mobile platform for these music services. Since smart phones only cover a small part of the market, Verizon hopes to capitalize on the rest of the consumers with these new music phones.