It is two weeks to the launch of iPhone, one of the most eagerly awaited mobile phones on the planet. Whether it is a hit or a miss, it is going to do one thing: refocus attention on mobile music, and will get carriers scrambling to come up with a competitive offering.
Omnifone, a Swedish company has launched a new mobile music service, MusicStation to take on iPhone and Apple, in Europe and Asia. The network operator friendly service is trying to take advantage of mobile companies’ distrust of Apple and capitalize on the fact that Apple still doesn’t have a carrier partner outside of Europe.
So why should MusicStation win in Europe? One reason is rooted in the way that mobile operators hawk instead of sell phones. In many markets – UK in particular –operators heavily subsidize the sticker price of the phones. It is not uncommon, for instance, for a network operator to give away for free a high-end handset, such as the Nokia N95, if a consumer agrees to sign up for an 18 month contract. That particular phone is worth over $400, still likely to be less expensive than an iPhone.
Network operators have many reasons for balking at subsidizing the iPhone. First, most consumers are likely to load up their iPhones with music via their personal computers – not the airwaves. Second, there is no incentive for them to even try to download over a cellular network since the iPhone – unlike its competitors in Europe and Asia – doesn’t support 3G.
Even better from the operator’s perspective: MusicStation can be a handset’s ‘idle screen’. In other words, the service will be staring users in the face. Tim Hadley at Omnifone (MusicStation’s creator) says network operators will even be able to create a dedicated MusicStation button for their handsets if they wish.
Then there’s the payment mechanism. In the mobile phone world, music sales are heavily targeted at the youth market. The most common form of payment on iTunes is the credit card, but kids don’t have credit cards. With MusicStation, kids pay $3.50 per week for unlimited downloads—and the subscription fee is taken directly from their mobile phone bill. This works whether they have a pre-paid tariff plan, or standard post-paid contract.
Curiously, Omnifone’s Tim Hadley says his company is taking an “Apple-like” approach to rolling out the product. In each territory, Omnifone will leave the job of actually selling the service to its mobile operator-partner.
MusicStation made its debut in Sweden with Telenor, and Omnifone has agreements to go live with 29 other operators in Europe and Asia in the last half of 2007. While Telenor launched with just two handsets – the W880i and Sony Ericsson’s K810i, handsets from Samsung (Z240) and Nokia (N93) are soon to follow. For now, operators plan to ship their handsets with MusicStation’s software pre-installed to avoid the support nightmares that come when consumers self-install.
Omnifone boasts that its software will be pre-installed on 100 million handsets, globally, within 12 months. If that is the case, then could it be that iPhone is just an America-only success? It is an idea with some precedent: for years Palm’s Treo smart phones has sold poorly abroad, but with great success in the US. At least that is what Omnifone is praying for!
12 comments so far
1:47 AM PT
You’re falling for their pr if you really believe someone wouldn’t buy the Iphone because on different phone there’s Musicstation. This suggests that people buy the Iphone purely as an Ipod you can make calls with.
And: Musicstation is way too expensive. And: There are a lot of programmes pre-installed on European mobiles. Problem is: the majoritiy of useres doesn’t care.
Finally: Will Musicstation really close itself from the Iphone? Or won’t they be eager to get on there as well?
2:49 AM PT
I think MusicStation will not have success, due to its perverted business model: you pay 3.50 each week and whanever you close your contract with Omnifone you loose your playlist. So the point is this: are you ready to pay for the rest of your life 15dollar fro you music?? It’s aboout 180 dollar per year…instead of buy your song (permanently) and tranfer them on your mobile…If they transform the rent policy to the more realistic property model iTunes will starve (don’t know iPhone, but iTunes certainly yes).
Sorry for my bad english…
an italian reader
4:53 AM PT
MusicStation actually leaves US for Didiom’s mobile music marketplace. I downloaded their application (free) a few weeks ago and just couldn’t believe my eyes. Their UI is very cool. Not to mention their bidding functionality.
5:50 AM PT
Network operators are too much focused on trying to create value through instant connectivity (what they perceive as their value add and point of control) and not enough in understanding the difference between consumption and discovery. What Apple understands better thatn the carriers is that discovery and browsing are better done with a large screen and keep innovating and ingraining those habits (e.g. coverflow).
So I think the iTunes model of syncing is what will keep the iPhone/iPod selling in spite of Musicstation.
8:50 AM PT
Hey! Would “Rob Lewis” (see comments) be the same Rob Lewis CEO of MusicStation/Omniphone? (link)
12:43 PM PT
What about Mercora? MusicStation (and the iPhone, by the way), have already been beaten to the “wireless music to your cell phone” punch by the “M” app from Mercora. You can get your music, your friend’s…very cool features. I love it, and I’ll stick with it over iPhone or MusicStation. Just my two cents.
2:07 PM PT
(link)
It’s here already!!! The iPhone and at great prices!!
11:05 PM PT
The Omnifone announcement is just another spin on the rental music model, and will fail accordingly:
(link)
7:59 AM PT
You’re right, the payment option is clever ‘cos you’re going to be paying the phone bill anyway, it’s not a separate action to pay for your music, so some suckers will just go along with it without thinking. But it’s outrageously expensive compared to the way most users tse iTunes, you don’t own the music, and you’re tied to Omniphone for life if you want to keep the songs.
As a deal, it sucks.
8:38 AM PT
$182 per year for renting DRM-ed music that disappears when you stop paying?
A library of only 1 million songs compared to the 5 million+ on iTunes?
Omnifone themselves state that the average consumer only buys 6 songs a year ($6) and they reckon people will suddenly pony up megabucks for this hobbled solution?
They have got to be kidding!
Blackfriars’ has a good critique on the topic:
(link)
-Mart
12:47 AM PT
Please point me at a music subscription service that has succeeded. MusicStation are hoping for pigs to fly if they think that people will buy some other phone instead of the iPhone based on the strength of a download service alone.
I’ve yet to meet the person who has their music library on their cellphone instead of a dedicated device as well. iPod is proven, so people with cash will buy iPhone, just because its what they know.
Who is MusicStation? Burning through VC money and bankrupt in few months, thats who ;)
11:18 AM PT
After looking at the Omnifone website and watching the demo video I think this is a very good product. No messing around having to down load to a PC first, the sound quality is as good as any ipod and for £1.99 a week a million songs. If you buy an iphone for 4/500 dollars that would cover several years of Music Station. My cell phone server sends me a new phone every year for free, so I will be signing up to Music Station as soon as I can. Just think of the hours playing with all the available music travelling to and from work. You can play the music though your car radio and hi-fi, instant songs no messing with PC’s.