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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!

10 Responses to “Digital Music Services, Dot Bombs of Today?”

  1. The PS comment is a bit of a myth pls check “Japan Mobile Market Myths from Past and Present” .

    I have had a lot of experience with full downloads in Asia, and at the very start the phone buying experience was not good but the hardware was. Fast forward 9 months later and the handsets have improved the buying interface and the mobile music portals are excelent and fun with flash animations and real fast downloads. The headsets are excelent as the sound. Results so far are that more than 108.9 million songs (Includes full songs and polyphonic) have been downloaded in the first 6 months of this year. The price is about $3USD per song. There is also a generation gap that will argue that no one in their right mind would pay $3 dollars a song when in reality there a a couple million that will and many times. It was the same argument I heard 2 years ago about ringtones, who would pay $1.99 for 30 seconds of sound. 2 years later it is a $400 million buisness. As mentioned before the key to success will be in the hardware and user experience and how serious the carriers are to execute with the consumer in mind and not for the next couple of quarterly revenue results.

  2. Jesse Kopelman

    This is the same old problem that has haunted the wireless telephony industry for at least 5 years. Basically the vendors and carriers are locked in a self-destructive incestuous relationship where each is constantly waiting for the other to take the lead and figure out what to do. Carriers didn’t want to build 3G networks until vendors made better phones, yet vendors didn’t want to make better phones for nonexistant networks. Meanwhile vendors come up with cool features/devices that carriers decide don’t mesh with the business plan and won’t sell, yet for the most part the vendors are too chicken shit to sell the device directly to consumers. At the same time carriers aren’t proactive about what consumers actually want and tend to go more with how to sell what the vendors give them. So, basically you have a situation where nobody gets what they want except by accident and no chance that they get it right away. All of this is probably a holdover from the good old days where you got what Bell felt like giving you and you liked it, dang-nabit.

  3. drew, interesting points… look at it this way, ipod was not the first one to figure out that music players werea big business. but it still is the biggest selling. since then many have come out with mp3 players, but ipod keeps trucking. people think it is cool and device. i think its simplicity. nothing more and nothing less. add too many complexities and things start to go wrong with mp3 players.

    same is with music phones. i have been playing around with some, and if those are any indication, then, well its a long journey ahead.

  4. Per this post from March 2003 [ ], Cingular and Verizon aren’t dot-bombs — they’re the 90s fiber guys without the glass. The mobile carriers have got a decade or less to notice that David Isenberg is right and they’re just mobile packet pushers. Either they quickly adopt high-volume, low-cost strategies at Layer 3 without all the worthless extra services or the stockholders can kiss their backsides goodbye.

  5. I am with Kartik. It’s only a matter of time. I recently got a MOT V330. I now take all kinds of pictures with the PhoneCam — some of them pretty good that other folks want to have emailed to them. When I get around to figuring out how to do that Tmobile will have an additional revenue stream. If the handset folks come out with easy-to-use stand-alone MP3 players people will start using them rather than their IPods or Zens. Then the cellular providers will have a market opportunity. But the egg (handsets) has to come before the chicken (download services). It’ll take 2-3 years.

  6. Om,
    I agree with your comments about the fact that the mad scramble to offer digital music services is similar to the Gold rush in California in the 1840-1850’s.

    That being said, I would not rush to judgement about the inability of current/future mobile handsets to play music.
    Currently, Sony-Ericsson’s W800 (check out the review at
    seems to have the ability to let users plug in their favorite headphones via an adapter. Also, the quality of music seems acceptable based on the above review.

    Nokia has lifted the covers off the N91 and Motorola has the “iTunes” phone in the pipeline.

    The audio quality might not be as good as a Bose audio system or the UI on the phone might be lacking as compared to that of the iPod…but I believe mobile handset makers(Nokia, Motorola, Sony-Ericsson and Samsung) are getting there and it is only a matter of time before mobile phones complement (not replace) the iPod/MP3 players in their ability to play music.