A new report from Pyramid Research argues that the pricing mobile operators are offering for music downloads is not sustainable, despite the fact that Sprint Nextel announced more than 1 million music downloads after just four months of service launch. Most operators are selling songs for more than iTunes' 99-cent price tag. Sprint Nextel is selling service for $2.49, but the 1 million downloads include many free downloads since the operator offered a promotion that included five free downloads. Pyramid estimates that the actual number of Sprint Nextel subscribers paying full price for song downloads was only a few hundred thousand. Verizon Wireless executives have told me customers are willing to pay its $1.99 price tag for song downloads, but I certainly don't know how many subscribers are willing to do that. Pyramid says that the novelty element to mobile music may cover up the inflated pricing for now, but operators will have to drop prices to the $1.25 to $1.50 range. I argue operators may have to move down to a loss-making 99-cents per download in the long-run and try to make up for it by combining other types of offerings.
To read more about Pyramid's mobile music report:
- take a look at this report from the company