Phone Makers, Carriers Need to Face the Music

Research firm In-Stat said Tuesday that the market for mobile music in the United States could be larger than the mobile gaming market, but both manufacturers and carriers need to act fast in order to cash in on what could be a very profitable business.

The news is nothing but good for carriers like Cingular who plans to attempt a mobile music service next year, possibly with Apple. Motorola, meanwhile, recently introduced the ROKR iTunes phone capable of holding 100 songs.

There are several issues still preventing a wide scale adoption by both consumers and the industry, including pricing, revenue sharing and digital rights management (DRM) that In-Stat needs to be worked out.

"The window to catch a group of wireless users we call ‘Mobile Music Intenders' - those interested in mobile music services - may be closing soon," says David Chamberlain, In-Stat analyst.

These 'Music Intenders' are bigger spenders on their cellular handsets: a quarter of them spent more than $150. A large majority -- two-thirds -- expect to upgrade before the end of the year.

"They're ready to buy new handsets and they're willing to pay extra for handsets that play music. Without available music services or handsets, carriers may miss this opportunity to grab what could end up being a very lucrative mobile music market," Chamberlain added.

Also, manufacturers may want to take note of the age, sex and what carriers this group prefers; they're young, male, and prefer Sprint and T-Mobile.

To date, neither service has announced any intention to launch a mobile muysic download service. T-Mobile doesn't offer any phones with music capabilities as a primary feature, and Sprint's music offerings are streaming-only through its Vision service.