Digital Music Sounds a Sour Note for Carriers

ituneslogoNine out of 10 Americans don’t listen to music on their cell phones, according to a Forrester Research note released today on “The Future Of Music On Cell Phones.” The report gives a bunch of reasons for this, but all the conclusions are bad news for carriers. First, digital music isn’t a viable revenue stream for them (and, in fact, carriers’ attempts to monetize music gets the blame for Americans giving on-device music the cold shoulder). Second, Americans enjoy streaming music services, such as Pandora, that eat up a lot of bandwidth on carriers’ 3G networks.

The music experience on phones (especially pre-iPhone) has been pretty terrible, and the dedicated music services from carriers have been expensive and little used, the report notes. With customers used to paying 99 cents for songs on iTunes and the like, they are unwilling to pay a “portable premium” for songs on the go — especially because iTunes offers songs on the iPhone for the same price as on the PC.

Additionally, consumers want platform-agnostic music, without DRM, Forrester says. Other handset makers are trying to copy the iTunes model, and carriers are at great risk of losing out on the revenue stream from music, as the industry moves towards the model of a carrier being neutral rather than acting as the content provider for their customers. The days of $2.99 ringtone downloads have long since passed. To add insult to injury, mobile phone users are enthusiastic about streaming music services like Pandora, which can hurt carriers by using up a lot of bandwidth without producing any additional revenue outside of the monthly data plan.

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