Mobile Music May Bring Meager Carrier Profit

On the eve of the rumored Apple iPhone launch, Reuters writes that the carriers might not see a boost to their coffers from selling mobile music.

Yankee Group analyst Linda Barrabee said, "There's very little room for profits from the full over-the-air download market." She thought there wasn't enough incentive for consumers to pay more than a 99 cent iTunes song for cell phone music, but if carriers matched this price then profit margins would suffer.

According to Barrabee, "about 70 percent of the sale price for iTunes songs downloaded on computers goes to music industry players, and the remainder is split almost evenly between Apple and transaction processors such as credit card companies." In the mobile world, "operators could eliminate the credit card industry's roughly 15 percent share of the pie by charging through mobile phone bills," and Yankee estimated "operators get 20 to 40 percent of revenue from ringtones."

Forrester analyst Charles Golvin suggested carriers might get away with charging a premium if they could offer more than just a song. "Carriers could ask for as much as $4 for a package that could include a full song, a musical ringtone and maybe some graphics all related to the same song," commented Golvin.

Hmmm. Not sure about that one. Maybe for a music video but if your phone can play a song, it probably has the capability to play MP3s as ring tones too. So $4 to get an extra ring tone doesn't make sense to me.....