Will new mobile music alternatives strike a chord?

The congested and combative mobile music space looks even more like a mosh pit following news this week that Internet retail giant Amazon.com and handset maker Sony Ericsson will step up their respective digital music efforts. On Tuesday, Amazon announced [1] its Amazon MP3 [2] digital music store will arrive preloaded on the T-Mobile G1 when the phone--the first-ever device powered by Google's Android mobile operating system--hits stores next month. Amazon will optimize a new version of the Amazon MP3 application for the T-Mobile G1--users downloading music from the store will require a WiFi connection, but they may search, browse and listen to samples anywhere across T-Mobile USA's network footprint. According to Amazon, the store offers more than 6 million DRM-free MP3 songs from all four major labels and thousands of independent labels; Amazon MP3 prices its 100 bestselling songs at 89 cents, with more than 1 million more songs available at the same price point, while its 100 bestselling albums are $8.99 or less, with most albums priced from $5.99 to $9.99 and more than 80 percent of its album catalog priced at $8.99 or less.

A day later, Sony Ericsson officially confirmed [3] it will introduce PlayNow plus, its much-rumored [3] unlimited music download service. Created in collaboration with digital music service provider Omnifone, PlayNow plus will offer all-you-can-eat access to millions of DRM-free tracks from the four major labels (EMI, Sony BMG, Universal Music Group, and Warner Music) as well as thousands of independent labels--subscribers may recommend content to fellow PlayNow plus users, and when their contract expires they may keep a number of tracks from their favorites list, although Sony Ericsson has yet to specify exactly how many songs consumers may retain. Expected to debut commercially via Swedish operator Telenor during the fourth quarter, with additional global rollouts on tap for early 2009, PlayNow plus is a direct response to rival handset maker Nokia's upcoming Comes With Music [4] all-you-can-eat subscription service, scheduled to go live in the U.K. next month. Add to the mix MySpace Music, the social network-backed online retail service that also launched this week, and the fight for digital music marketshare is more intense than ever.

Exactly what everyone is fighting for is another question altogether. It's no secret mobile music sales are flagging--speaking earlier this month at the CTIA Wireless IT and Entertainment event in San Francisco, Warner Music Group EVP of digital strategy and business development Michael Nash blamed [5] the malaise on the divide between consumer demands and existing business models, arguing in favor of subscription services and content bundles. Nash contrasted the Japanese mobile music market with its U.S. counterpart, noting that Japan enjoys a 34 percent compound annual revenue growth on mobile music thanks to bundling and related retail alternatives, compared to just 5 percent CAGR in the U.S. And just a few months back, market analysis firm Jupiter Research reported [6] that 66 percent of U.S. wireless subscribers express no interest in premium mobile music services whatsoever, citing a combination of consumer apathy and content access complexities. Of the 1,800 respondents queried by Jupiter, 28 percent were interested in ringtones, and only 14 percent were interested in full-track downloads. According to Jupiter, the blame lies with current pricing models--consumers expect per-track costs comparable to Apple's 99-cent iTunes prices, with copyright restrictions, content storage restrictions and the popularity of dedicated music devices like iPods also contributing to customer indifference.

It's much too soon to determine whether Amazon, Sony Ericsson and Nokia can turn the tide, but it does appear they've learned their lessons from iTunes' success and their mobile music predecessors' mistakes. Amazon MP3's prices are even cheaper than Apple's, and consumers don't have to worry about device compatibility concerns thanks to the store's DRM-free guarantee--meanwhile, both Sony Ericsson and Nokia are abandoning traditional a la carte pricing altogether in favor of the subscription-based approach championed by Warner Music's Nash and supported by a consumer study [7] issued last week by market intelligence firm Strategy Analytics, which reports that 84 percent of subscribers are willing to pay for an all-you-can-eat mobile music service. But rumors [8] persist that Apple is planning an iTunes subscription service of its own, which if true brings the mobile music marketplace back to square one--i.e., stuck in the shadow of the iPod and everything that consumers love about the device. The more things change, the more they stay the same. -Jason [9]