Get on Track with Mobile Music

Analyst firm Pyramid Research has issued a report entitled, “Get on Track with Mobile Music: Exploring Mobile Music Best Practices” that finds the market for mobile music is promising, but "success hinges on operators and content providers applying the right business models to increase mobile data usage and prevent illegal P2P sharing."

The report looks at the business models used by SK Telecom in South Korea and KDDI in Japan and claims during the first quarter of offering music service, "SK Telecom saw more than half a million mobile music subscriptions and KDDI’s 3G ARPUs increased by nearly 40%."

Both carriers use different models with SK Telecom offering monthly music subscriptions while KDDI sells individual tracks. According to analyst Nick Holland "the subscription model may hold the key to drive revenue and lessen piracy through continuous, predictable revenue streams and the promotion of additional purchases."

"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," Holland added.

The report notes "mobile music will drive demand for sophisticated (and expensive) handsets, as well as increase data ARPUs if carriers can replicate models that encourage over-the-air downloads, as seen with KDDI’s ‘Chaku-Uta Full’ service."

There is nothing earth-shattering in the press release, although the carriers' results are impressive. Of course, things might change quickly, especially in Japan. With the recent introduction of Apple's iTunes, the impact on KDDI's song pricing and APRU will need to be closely watched...