Cell-Phone Users Want Their Tunes

Market-research firm In-Stat says more than 10% of Americans would pay to listen to music on their handsets, indicating a potentially strong market for downloadable tunes.
More than 1 in 10 of U.S. cell-phone users are ready to open their wallets to listen to music on their handsets, an indicator of a potentially strong market for downloadable tunes, a market-research firm said Wednesday.

A survey of 1,009 handset users found 11.4% "very or extremely interested" in buying full-featured music and audio services, In-Stat/MDR said. Such services would include music downloading and streaming radio, including talk and news.

Particularly encouraging for wireless carriers that would sell the services on their networks are the demographics of the potential customers. They tended to be professionals at the younger end of the spectrum of cell-phone subscribers, indicating that they have the income necessary to pay for such luxuries, In-Stat said. In addition, the likely customer is male and spends 14% more than the average user on his cellular phone service.

While the number of music lovers ready to pay for multimedia services is small, it's not insignificant. "It shows there's more than just a passing interest among subscribers," In-Stat analyst Neil Strother said.

Boosting In-Stat's findings was another study released Wednesday that showed the willingness of U.S. consumers to pay for digital content.

The study found more than 10 million Americans purchased digital content from the Internet for less than $2 in the last year, with music the most popular download, according to study authors Ipsos-Insight, a market research firm, and payment technology vendor Peppercoin Inc.

The number of people downloading content represented nearly a 150% increase from the 4 million consumers who bought low-priced content in a similar study in 2003.

In-Stat predicts multimedia services will become "one of the next big growth areas for the cellular business," as carriers and handset manufacturers turn up the marketing.

But if sales are to take off, a number of technological deficiencies will have to be overcome. Today's handsets capable of playing MP3 music files fall far short of the thousand-song capacity experts say is necessary to attract users. In addition, carriers and phone makers will have to be able to ensure against illegal copying of music to get record companies onboard.

Most of the major handset manufacturers, including LG Electronics, Motorola, Nokia, Samsung, and Sony Ericsson, are shipping phones that can play MP3 files downloaded from a PC. These phones are too expensive for average users, but prices are expected to come down over the next year or so.

"They're not mainstream phones yet," Strother said.

The study also found that T-Mobile and Sprint PCS subscribers were the most likely to pay for music services. Both carriers have heavily marketed data services, such as messaging and digital pictures, and advanced handsets, Strother said.

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