Can Mobile Music Apps Pick Up Where Ringtone Sales Left Off?

Nokia Comes With Music Phone and PC

Ringtone sales cratered last year — and by the looks of the latest stats from Nielsen RingScan, 2009 will bring more of the same. Sales are already down 23 percent, per Billboard. Meanwhile, handset makers and wireless providers offer full-track downloads through various content platforms, but mobile music sales are still minimal.

So now the industry is starting to focus on music apps like Pandora, Spotify and Rhapsody, in the hopes that they’ll evolve into sustainable sources of revenue across the board — for the carriers, the platform providers, and the record labels, too. And there are a few reasons why the mobile music app business might fare better than ringtones in the long run.

*Apple* kicked off an app obsession with the App Store last year — but it wasn’t just about getting people to buy apps; it was about getting the carriers and handset makers to open up and allow third-parties to offer content without interference. And Forrester Research analyst Sonal Gandhi told Billboard that this new “open” app ecosystem has helped double mobile music usage over the past year.

Mobile music apps also have subscription revenue streams built in from the start, options that didn’t seem to catch on with ringtones. Rhapsody’s newly-launched streaming music iPhone app is an extension of its $15 per month portable music offering, for example, and Spotify’s app gives European users streaming music for roughly $10 per month. If these pay-to-play apps really catch on, Gandhi says we can expect mobile carriers to start bundling music subscription services into their unlimited data plans. “They can get people to pay a certain amount monthly without even thinking about it,” she told Billboard.

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