CTIA Wireless 2009
Verizon Wireless is the First U.S. Carrier to Offer DRM-Free MP3s
| Apr 6, 2009 | Wireless Services - U.S. | Show Update
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Analyst: Deepa Karthikeyan
Current Perspective: Slightly Negative
Vendor Importance: Moderate
Market Impact: Moderate |
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Event Summary
April 2, 2009 – Verizon Wireless became the first carrier to offer over 5 million MP3 format music files to its consumers via the online Media Store. Starting April 7, the carrier will introduce tiered pricing where consumers will be charged $1.29 for new and best selling songs, 69 cents for classics and 99 cents for the rest. Consumers however will not be able to download the songs directly to their handsets; the songs will have to be downloaded onto the PC via the download manager first and then sideloaded to MP3 capable devices including MP3 cell phones.
Analytical Summary
• Current Perspective: Slightly negative on Verizon Wireless’ launch of MP3s on its online Media Store as the steep tiered pricing structure of the service is unlikely to encourage adoption. The carrier has priced the DRM-free MP3s at $0.69 for classics, $0.99 for contemporary tracks and $1.29 for new and best selling tracks. This is highly uncompetitive especially since online MP3 stores such as the iTunes store and the Amazon MP3 music service that feature a more comprehensive music database offer DRM-free songs for $0.99 and $0.79 per track respectively, giving consumers very little reason to shop with Verizon Wireless. The carrier’s MP3 Download Manager essentially allows the user to sideload MP3s stored in their computer onto a MP3 capable device (including a handset), giving them free rein to download MP3s at cheaper rates from other online sites and transfer them on their handsets.
• Vendor Importance: Moderate to Verizon Wireless as the announcement highlights its V CAST music service and differentiates its offering from those of its competitors. The launch is however unlikely to lead to an increase in VCAST VPak subscription as the MP3 format is only applicable to PC music downloads.
• Market Impact: Moderate on the U.S. wireless segment, because Verizon Wireless’ launch signals the first attempt by a carrier branded service to offer DRM-free tunes, albeit only via the online Media store, suggesting the need to adapt to a tough and fluid music space. The move is unlikely to elicit strong reactions as Sprint discontinued its PC download offering while AT&T and T-Mobile have yet to offer self-branded music storefronts.
CLIENTS ONLY
Current Perspective
Competitive Positives and Concerns
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