Digital Music Services, Dot Bombs of Today?

New York Bodegas to announce a Latino music digital download service…. Indian corner shops now offering one song and two Samosas for a $1….. given the current state of madness around digital music, I would not be surprised to see those headlines hit my RSS reader. Not a day goes by when I read a news release of one brand name company or the other announcing their digital music service.

Cingular, Best Buy, 7-11, Verizon …. the list is endless, and grows by the day. Today, there is news that Sprint-Nextel are announcing a mobile digital music service. All these folks look at the amazing success of Apple’s iTunes and think to themselves – I got a brand, I got distribution, I got money – in other words, we got everything Steve Jobs has got, so why can’t we get in on the digital music action.

The record labels, are happy to add to their delusions. Record industry believes that Steve got better of them (right on!) but conveniently forget that it was iTunes that shifted focus from illegal downloads to a more sane download strategy. But that rant for another day. They look at $2 ringtones, and feel they can get $3 for the full songs. Never mind the fact that most music download services are currently sucking wind.

Mobile music on phones via cellular companies is going to be the most overrated business move. Why? Mobile operators are not known for ‘ease of use,’ and even today (barring voice) new phones are inherently complex. Have you tried to look up calendar or contact information on a Motorola? Imagine downloading music, and listening to it on a phone. Have you seen the headphones on most of the phones – they are uglier than baboon’s rear end.

Given the large number of options being created by different players, consumers will only going to be confused. Which player to buy? Which service to subscribe? Can I transfer music from phone to computer? The customer-support is going to make these new services economically questionable. iTunes & iPod are an island of serenity amidst this UI madness. They are also the safe middle ground. Download, burn, or play on your iPod, all within seconds.

I asked my sister if she would listen to music on her phone? “You are crazy?” she said. “Why would I do that when I can listen to music in my car, or on iPod in the gym or on my stereo.” I asked a few others – same reaction. A very smart source of mine laughs at these digital music developments and points out, “these guys think because they can play baseball, it means they will be awesome at football and basketball.”

Previously I had suggested that any carrier who strikes a deal with Apple will get a lot of Apple/iTunes users, and be better off in the long run selling their core product – voice service. At $40 a month, its a better return on investment than selling $3 a song, and then dealing with the ensuing headaches.

As for Best Buys of the world: worry about Wal-Mart guys!

PS: Overseas its a whole different situation – fewer PCs and better handsets, and networks, might make mobile music more viable in Asia!