Exploring Mobile Music Best Practices

During their first quarter of offering mobile music services, SK Telecom saw 4.2% subscriber growth and KDDI’s ARPS increased by 4% says the new Pyramid Research report, “Get on Track with Mobile Music: Exploring Mobile Music Best Practices.”  Mobile music is promising to all stakeholders, but it is critical for operators and content providers to apply the right business model to increase mobile data usage and prevent illegal P2P sharing.

SK Telecom and KDDI have implemented two variations of the mobile music business model; KDDI uses the traditional model of selling tracks individually while SK Telecom applies a subscription based model with a monthly fee to keep and add additional content.  The music industry has come to accept the single track purchase model, but Pyramid Research Senior Analyst Nick Holland argues that “the subscription model is superior for content and service providers because it provides a continual revenue stream and promotes additional purchases as subscribers will legally download content and eventual purchase a song or album.”

For network operators, mobile music will drive demand for sophisticated (and expensive) handsets as well as increase data ARPUs if vendors are able to produce a model that encourages over-the-air downloads, as seen in the KDDI’s service ‘Chaku-Uta Full’.   Mobile music services will eventually allow operators to charge premiums for subscriptions and single track downloads.   To prospective providers, Holland cautions, “Pay music services have set the bar at 99 cents per track.  Operators will be able to charge a slight premium for mobile access to music, but European and North American markets will not support the $3 price tag found in Japan.”