Thursday, August 25, 2005

Will Cell Phones Be the Music Business Savior?

Business 2.0 writes that due to the success of ring tones, the cell phone just might save the music business, although it seems the industry is doing a pretty good job of shooting itself in the foot at this point.

The article notes that mobile phones are the "first real digital-music moneymaker for record labels, because they bring in much more from cell-phone downloads than from other digital outlets. Mastertones sell for nearly three times as much as iTunes tracks, and the labels often command royalties as high as 50 percent."

With new music phones set to hit the market and Verizon "rumored to be launching a nationwide 3G (third-generation) music service selling mastertones and songs this fall," the music labels are licking their lips in anticpation of what Strategy Analytics predicts to be a $9 billion business by 2010.

As noted many times in the past, the music industry might be a bit short-sighted if it believes consumers will pay ringtone prices for downloading full-length songs to their phone, especially since iTunes has helped establish the 99 cent price level in consumers' minds. As for the ringtone gravy train, phones that can play MP3s will help deflate that market pretty fast as tech-savvy teens and young adults learn how to convert their digital music library into ringtones...for free...