Will the Music Cellphones Sweeping Japan Play in the U.S.?

The Wall Street Journal (subscription required) analyzes the potential for music phones in the U.S. by looking eastward at what is currently happening in Japan. According to consulting firm Bain & Co., "revenue from the music sold over mobile phones -- from simple ringtones to full songs -- accounts for about 20 percent of Japan's total music market."

The article notes some of the factors driving OTA music downloads in Japan including music-enabled handsets, 3G networks and the fact that the PC has not been established as the center for digital music. The cellphone-music market in Japan has already surpassed the market for music downloaded using a PC. In the first six months of 2005, PC-based music downloading was just $4.8 million, compared with $122.1 million for music -- not including ringtones -- downloaded to cellphones, according to the Recording Industry Association of Japan.

In the U.S., where the PC is well established as the main conduit for music downloads, carriers will have to convice consumers to download music over the air. Yankee Group analyst Mike Goodman said, "I carried both my cellphone and my iPod in the past year, And I didn't have any problem with that at all." Pricing muisc above 99 cents will be an issue as well. The article cites a Yankee Group survey in 2004 that found "Internet users' likelihood of downloading music from a licensed service declined 58 percent if prices were raised from 99 cents to $1.49."

What's more, in an online survey this year, Forrester Research Inc. found that among more than 5,000 adults, only 1% said a digital music player was a must-have feature for cellphones. More desirable, they said: longer battery life, a built-in camera and high-speed data access.

The "phone as a music player isn't bringing anything new to the table. Americans don't view their cellphones as entertainment devices but more as communications devices," added Goodman.