Omnifone Opens Music Buffet for Hungry EU Mobile Markets

A UK-based phone maker announced a flat-rate music download service for mobile phones in key European markets Thursday, getting the service -- which works with a host of phones -- into stores two weeks ahead of Apple's (Nasdaq: AAPL) hotly anticipated iPhone.

Omnifone launched MusicStation -- which comes with subscription music access provided by multiple major labels -- in several European countries. The iPhone, which will combine a full-function iPod with a smartphone, is scheduled for a June 29 release in the U.S. and overseas.

Omnifone has signed deals with 30 mobile network operators to support the service, the company said, adding that more launches will follow in Asia-Pacific markets, elsewhere in Europe and in Africa. The partnerships could give the device a reach of up to 100 million subscribers. Omnifone indicated it had no plans to target the North American market.

Flat Rate

MusicStation will enable users to download songs from the catalogs of Universal Music Group, Sony BMG, Warner Music and EMI Music on an "all-you-can-eat" subscription basis. Users will pay their carriers a weekly fee of about US$4 for the right to access the download service. Users will not pay additional over-the-air data download charges.

The launch "heralds the beginning of the next generation of mobile music" by providing "ultimate music freedom," said Omnifone CEO Rob Lewis.

"Consumers will have the ability to legally access, download and enjoy an unlimited amount of music, from an international and localized music catalog, supported by the whole music industry," he noted. "MusicStation users can download music, wherever they are, at any time and with no charge for data."

Waiting for iPhone

Telenor, a carrier that operates in Sweden and other Scandinavian countries, was the first to offer MusicStation starting Thursday.

Europe and Asia include many of the markets where mobile music will be in heaviest demand in coming years, said Bloor Research IT analyst Robin Bloor.

MusicStation will run on all 2.5G and 3G phones that have built-in music capabilities, which make up about 80 percent of all phones sold in Western Europe. Most devices will have the same interface; this could help build loyalty as users change phones or carriers in the future.

The service will store a user's downloads so that playlists can be restored if a device is lost or damaged, while the most-frequently played tracks are stored on a phone's internal memory. As a result, users can access some songs even when out of a network's range -- such as when aboard an airline flight where cell phone usage is prohibited.

The service also has a social networking component, allowing users to share playlists and song reviews.

Ahead of the Curve

Many music industry analysts have long believed that subscription services would eventually emerge as the preference of consumers over per-song download services.

To date, however, most carrier-sponsored download services have left users wanting, with limited selection, hard-to-use interfaces and the added cost of paying per-minute to download songs -- often a lengthy process on slower networks -- said Gartner (NYSE: IT) analyst Alan Brown.

"Carriers have tried to stay in the middle and the result has been disappointing services," he told the E-Commerce Times. In addition, phone makers have only recently begun to significantly boost the fidelity of handsets, with newer phones often offering far higher sound quality. "That's only going to increase."

The timing of the launch underscores how high the stakes are for the upcoming iPhone launch, both for Apple and the rest of the mobile phone industry. Early adoption of the iPhone is expected to be robust but contained somewhat by the high price tag of $500 or more and by the fact that only one carrier, AT&T, is offering support for the device.

While music is a key part of the iPhone, Apple has billed the device as a multifunction communications device, allowing users to talk, e-mail and access the Web along with the entertainment functions.

Even if the iPhone meets Apple's goal of selling 10 million units in the first year, that makes up just a fraction of the 1 billion cell phones sold each year worldwide, telecom analyst Jeff Kagan told the E-Commerce Times.

"Other carriers are answering by making their own music phones available," he noted. "We're already seeing phones with new designs emerge as well."