Wireless Music: 150% Is Too High A Premium

In a non-shocking study, Strategy Analytics has concluded that the current premiums that the two wireless carriers’ full-song music stores charge is too high. Sprint charges $2.50 a track while Verizon Wireless goes with the less ambitious $2.00 in a market that (for better or worse) Apple has defined as at $1 a shot. But Strategy Analytics went further, and did primary research with customers to try to find out what premium is justified by the fact that the music is available anytime, anyplace. In their end-user study, they concluded that customers are willing to pay a ~35% premium for mobile access to music, assuming the system works well. In our opinion, 35% is already a sizable premium, and we had already wondered why the wireless carriers would ever chose such huge mark-ups of +100%. The only possibility we can theorize is that they are concerned about the load a successful, popular music store would put on their networks — otherwise it’s just bad marketing. Addendum: Price really does matter. In the UK, iTunes is 79p/ea. UKVodafone launched music services at 3 pounds a track, and Hutch’s “3” eventually dropped their price to 99p. At 99p (just a 25% markup) “3” captures some 76% of the mobile download market.

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