Carriers Could Move the Needle in Mobile Music

Digital music has always been a difficult place to make a buck, but there continues to be a bevy of players willing to try. recently introduced a premium offering for phones and home entertainment systems (apparently ad dollars weren’t paying the rent), Spotify continues to promise a U.S. launch, and mSpot just launched a cloud-based service in Europe. Pandora appears to be the lone success story, as demonstrated by its growing user base, but the company has spent oodles of money just to approach profitability and — as Kevin noted in December — the field could get a lot more crowded this year as Apple and Google pursue streaming-music initiatives.

Mobile music has a particularly dubious track record. Nokia is abandoning its doomed Comes With Music service in all but a handful of markets, record labels are watching mobile revenues shrivel and according to new comScore data, fewer people are listening to music on their phones than are using mobile instant messaging. Mobile instant messaging!

There are plenty of reasons for the lack of traction in mobile, from ridiculously high pricing models to nightmarish DRM schemes to horrendously designed apps. But I think there are still opportunities in mobile music, and I think carriers are still well positioned to take advantage. No, seriously.

I know carriers are the primary reason mobile music has never come close to the irrationally optimistic forecasts of years past. But with their massive user bases and huge revenues, network operators have the luxury of viewing music services as an added bonus, not a fundamental source of revenue. They don’t have to profit from it; break-even would be just fine if services are leveraged in the right ways. So a savvy carrier (if such a beast exists) could operate a compelling service that generates money for others in the value chain and generates customers for itself.

Indeed, mobile music is a strategy that seems to be succeeding for the French carrier Orange, which four years ago launched a free streaming service called Deezer. Orange began charging for the service six months ago and last month said it had reached 500,000 paying customers.

So how can other carriers leverage music to lure users even as Apple, Google and countless smaller players join the space? For my thoughts on potential strategies, please see my weekly column at GigaOM Pro.

Image source: Flickr user Bohman.

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