Mobile music reaches tipping point

Days before Apple’s iPhone gains 3G capabilities courtesy of AT&T – seemingly enhancing its ability to access over-the-air music downloads – Verizon Wireless this week took a big step away from OTA music to link its mobile music ambitions closer to the PC.

There’s no doubt that music is a big driver of mobile devices, be they standalone MP3 players or cell/smartphones equipped with MP3 playback capabilities.

What’s less clear is exactly how consumers will ultimately buy (or rent) their mobile music, in part because the gadget cachet of the iPod – and its buy-by-the-song model – has overwhelmed any attempt to introduce alternative business models, ranging from jukebox-in-the-sky subscriptions to over-the-air streaming and downloads.

That’s what makes this week’s move by VZW so intriguing. Basically, Verizon handed over its Vcast music portal to RealNetworks, in the process moving away from a sole focus on high-margin (though low volume) OTA sales to a model that combines downloads to the phone and downloads to the PC, including an all-you-can-eat subscription model. The goal is to establish Verizon Wireless as a much more serious mobile music player by broadening the scope of its offerings. The service will initially be supported on seven of VZW’s current V Cast phones as well as new music phones launched going forward, including the upcoming LG Chocolate 3.

In many ways, we’re still on an evolutionary path created by the granddaddy of P2P, (the original) Napster, which conditioned users to download songs individually, for free whenever possible. Despite the creation of the popular iTunes music store, Apple’s iPod greatly benefited from the success of (less-than-legal) P2P music trading services. By combining no-cost P2P music with easy-to-buy iTunes purchases and wrapping them up in the impeccably designed iPod, Apple leapt out to a lead in the mobile music market it still enjoys today.

It’s notable that Verizon Wireless’ partnership with Real replaces its business relationship with Microsoft, which is now focused on its Zune player and Zune marketplace, which like Real offers music subscriptions. Can subscription-based music services from the likes of Microsoft and Verizon take a bite out of Apple’s stranglehold on mobile music? With VZW taking a bigger interest in tackling the broader music market, we may begin to find out.

E-mail me at rkarpinski@telephonyonline.com.