MusicStation wants the planet, leaves US for iPhone

musicstation2.gifIt 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!

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