There was a lot of speculation this week surrounding Apple Computer's intentions in the mobile arena. Apple filed to trademark the phrase "Mobile Me" for use in a wide range of businesses, furthering speculation it could introduce an iPod phone or launch an MVNO service. The move would be significant considering that iPods dominate the digital audio space, but execution will be key. It is already evident that Apple will need to work hard on the execution. Just last fall Apple and Motorola co-launched the iTunes ROKR phone for Cingular subscribers, but its arbitrary 100-song download cap made it a tough sell. In its second generation, the ROKR does not offer iTunes software.
Yet, because of Apple, the music download space has become a complicated one for mobile operators. Carriers launching music download services are trying to find their niche in the music ecosystem and are doing so by competing head-on with the digital music giant (whether they think they are or not), believing customers will pay more for the convenience of downloading music in a mobile environment.
We'll see if that's the case. But it seems that a better bet is marrying the phone's connectivity and content with mobile music, especially with the limited memory of mobile phones. How about allowing customers to create communities and exchange information through their music services? Or bundling offerings such as theme-oriented packages and mobile-music related content that not only include a full-track song, but perhaps graphics and ringtones, too? Mobile music already accounts for 40 percent of digital revenues for record companies with ringtones accounting for the bulk of the more than $400 million collected for mobile digital music last year. Wouldn't customers be willing to pay a bit more for the ringtone and the full-track download together? Or better yet, pay a nice premium for an exclusive release? There seems to be endless opportunities to tie in other applications with mobile music, whether it's m-commerce or short codes.
Apple will only increase its lead in the digital download space as it expands to more markets, including the mobile market. That's what it's good at. The number of unique visitors to iTunes reached 20.7 million in December 2005 from 6.1 million in the same month a year ago, according to Nielsen/NetRatings. To combat that, operators need to leverage their strengths strategically. - Lynnette