On Nov. 6, Cingular Wireless will become the first U.S. operator to provide mobile access to online digital music services such as Napster, eMusic and Yahoo Music. Unlike rivals Sprint and Verizon Wi
On Nov. 6, Cingular Wireless will become the first U.S. operator to provide mobile access to online digital music services such as Napster, eMusic and Yahoo Music. Unlike rivals Sprint and Verizon Wireless, which operate their own branded a la carte music download stores, Cingular is instead taking a partnership approach with subscription music services as the cornerstone of its mobile music strategy.
"We have no intentions of delivering our own branded service," says Jim Ryan, Cingular senior VP of consumer data services. "This is an optimal way to do it because these people know more about music that we do, so let's let them do what they do."
This strategy will be executed in two phases. For starters -- in an industry first -- Cingular is adding digital rights management technology from Microsoft -- known as PlaysForSure -- into five models of mobile phones, allowing users to transfer tracks from subscription services to them just like any other portable subscription device, all at no charge. This includes music downloaded from every music service using Microsoft's subscription DRM technology -- AOL Music, Napster, Rhapsody, Urge, and Yahoo Music.
Additionally, Cingular is working with each service individually to offer wireless access to their various account services, the extent of which differs by the partner. Napster, eMusic and Yahoo Music subscribers, for instance, can access their account, browse their respective libraries, and tag which songs they want to later load onto the device when synced with a PC, all from a Cingular phone.
Napster subscribers have the added benefit of being able to listen to 30-second clips, buy songs a la carte for 99-cents each, and identify songs heard on the radio using Cingular's MusicID service to then acquire via Napster. AOL Music, Rhapsody and MTV's Urge services, meanwhile, are not yet accessible through Cingular, and won't be until those companies develop a wireless portal.
What's missing from Cingular's approach at launch is the ability to download tracks over-the-air directly to the phone. Ryan says he expects to add this capability over the next six months and points to eMusic as the likely first to go live.
Once Cingular can deliver music right to the phone, the second phase of Cingular's strategy would go into effect. Ryan says he then wants to integrate the monthly music subscription fee into the Cingular phone bill and split the revenue with its partners.
"If Napster charges are integrated into a mobile bill, it makes it that much easier for the consumer to have a successful experience," says Napster president Brad Duea.
It's a risky strategy that the operator believes will rescue music subscription services from the relative obscurity it exists in today by solving its two biggest market impediments -- the lack of a popular portable subscription device and consumer's reticence to "rent" their music.
"We can double their base in the next 12 months," Ryan says. "We will solve the problem of subscription music and we will make a whole new business paradigm about digital music around subscription being real. I think we have a shot at actually offering a service experience that rivals if not exceeds what you get with an iTunes."
Cingular is gambling that a mobile music subscription service can meet the challenges that have plagued the music subscription market to date.
First is that it's still a device-driven market. None of these services are compatible with the popular Apple iPod and no competing device has emerged to rally consumers to the subscription banner. But mobile phones are much more popular and numerous than iPods. Making them PlaysForSure compatible gives music subscription services access to millions of potential subscribers that can use their service without having to buy a new device to do so.
The second challenge is convincing customers to pay for music as a service instead of buying it as a product. Judging by the low number of subscribers these services have acquired, the idea of "renting" music that will go away once the subscription ends has proven an unpopular one. Cingular believes wireless customers used to paying a monthly bill for phone services—increasingly including content services like music—will be less resistant to the idea.
"We think the music subscription business is going to get real and experience significant growth," Ryan says. "We think we can help that business by including it in our overall service and there will be a fair value for us in doing that."
Yet Cingular is resting its mobile music strategy on the shoulders of partners who to-date have yet to succeed in establishing a mass market. The company has been burned in the past when relying on music partners. Cingular introduced the ROKR iTunes compatible music phone from Motorola last year, but the strategy fell flat due to Apple’s limitations on the device and lack of marketing support.
The difference this time around is that these new music services need Cingular's support much more than Apple did, and Cingular is working with them much more closely to create an integrated experience.
Other elements of the Cingular Music service include 25 channels of streaming radio from XM Radio Mobile, Mobilecast podcasting, Billboard Mobile news and
concert information, and music videos from MTV and MusicChoice.
The marketing campaign supporting the overall service comes at the dawn of the holiday advertising season, and is expected to be the company's primary content-related advertising push. Company sources say the marketing campaign—including in-store music kiosks and in box promotions and a 60-day free trial for the Napster service—is the biggest they’ve seen in their time at the company.