Sony Ericsson updates the mobile music business model

For Sony Ericsson, the service itself is what generates revenues, but the only player in the ecosystem actually making money on the content is the content provider. Blomquist said it’s important to Sony Ericsson to have the service either way, because of its perceived value in the converged environment the world is moving towards. This migration to dual-mode delivery of mobile music has been the path of most music stores, according to Strategy Analytics. Based on its survey of consumers, 81% of people would pay $1 for a conventional download, and 81% would pay $1.20 for the same download directly to their mobile phone.

Still, carriers are just beginning to expand on the possibilities of unlimited music, and most still aren’t ready to make the plunge due to uncertainty in the business model. Unlike Nokia’s Comes With Music unlimited service, PlayNow relies in part on a subscription. Part of the price of PlayNow for the initial year is built into the $199 device. After the first year, the service costs $14.99 per month, and consumers can keep up to 300 of their favorite songs for playback on any compatible device.

“It’s a difficult mixture, but you would not sell just the music service on a phone,” Blomquist said. “It’d be way too expensive. You build propositions and combine it with tariffs that you have and come to a position where the price point is regarded as being a good value for money. If you separate the product, the cost structure is almost impossible. When you combine it, you have something very attractive.”