June 28, 2004

Mobile Phones & Music

T-Mobile Rings Up Music to Sell Download Phones

Mon Jun 28,10:05 AM ET

LONDON (Reuters) - More of Europe's music fans will be able to use their mobile phone like a digital music player as Germany's T-Mobile (news - web sites) (TMOG.UL) (DTEGn.DE) attempts to cash in on the song download craze

The mobile phone giant will announce the roll out later on Monday of five new handsets equipped with "Ear Phones" technology, which enables customers to download three CD-quality tracks to their phone.

It is the latest bid by a mobile phone group to drive traffic across networks and tempt customers into pricier handsets. Rivals Vodafone (news - web sites) Group Plc (VOD.L) and mm02 Plc (OOM.L) have launched similar deals, so far with little market impact.

Piracy-battered music companies, meanwhile, are trying to provide tech-savvy customers with yet another legitimate sales channel and reverse slumping music sales.

The T-Mobile handsets will be available as of Monday in its markets of Britain, Germany, the Netherlands, Austria and the Czech Republic.

Song downloads will be limited to a catalog of 500 "mobile mixes," or condensed versions lasting 90- to 120-seconds. They will cost roughly 1.50 pounds or 1.50 euros, well above the average 99 pence Internet (news - web sites) retailers charge for downloads, which can then be transferred to a digital music player.

T-Mobile reckons the relatively cheap handset upgrade will stoke early demand. Ear-phone handsets will have a launch price of between 29.99 pounds and 59.95 pounds for contract customers, compared with at least 200 pounds for a state-of-the-art digital music player such as Apple Computer Inc.'s (Nasdaq:AAPL - news) iPod.

But the market for mobile phone music players is very much unproven. Handset song capacity is limited and technology standards still need to be perfected before the potential music catalog can rival online download stores such as Apple iTunes.

T-Mobile, though, is promising a downloadable catalog of 250,000 full-length tracks by Christmas. It has already enlisted the help of some of the world's biggest music companies including Universal Music (EAUG.PA), Sony Music (6758.T) and Warner Music.

"We believe that music and the mobile space will continue to converge as a lifestyle focal point, and we intend to ensure that our artists realize the full benefit of that convergence," said Jim McDermott, senior vice president of new technologies at Sony Music International.

Posted by Craig at June 28, 2004 07:04 PM