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The large number of stakeholders in the mobile music value chain is the key obstacle in developing a workable business model. “The addition of mobile operators to the downloadable music value-chain adds a layer of complexity to the already proven Internet music download business model. Operators must successfully navigate this environment or they stand to lose out as handsets and mobile music services will keep them out of the value chain.
Mobile music presents one of the greatest mobile market opportunities, operators must reach win-win agreements with publishers and vendors to provide ‘over-the-air’ downloads in order to boost their data ARPUs.
Currently, most mobile carriers have resisted giving up full control of the mobile music opportunity and aim to develop their own music services. Carrier will continue to wield all their power to become a key part of the value chain. Currently, their main leverage has been handset subsidization, but that’s a vulnerable leverage as handset manufacturers will increasingly partner with publishers like iTunes, Napster and Real Rhapsody, cutting operators out of the loop. With rumors circulating of an iPhone, it is only a matter of time until a converged portable music player/mobile phone handsets has sufficient storage and functionality to replace both individual devices at a comparable price, minimizing the subsidization threat.
There are too many parties in the mobile music value chain all vying for a slice of US$1 per downloaded song. Operators may be the first to be excluded from the value chain, but as networks increase in sophistication, operators can push ‘over-the-air’ downloads to increase data ARPUs, but must be able to price downloads at a slight premium to the psychological barrier of US$1 per download set by Apple’s iTunes.
Learn all about the mobile music value-chain and best practices in Pyramid Research's new report, Get on Track with Mobile Music: Exploring Mobile Music Best Practices.
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