Unlimited free downloads on new phones
Yesterday, U.K. music download provider Omnifone announced a forthcoming program, MusicStation Max, that will offer cell phone buyers unlimited free music downloads. Of course, "free" is never free, and in this case, Omnifone is enlisting handset makers to subsidize the estimated cost of the downloads and pass that cost along to you in the form of a higher up-front price for the phone. So far, LG Electronics is the first cell phone maker to sign up for participation in the program. No confirmation yet on carrier partners, but the service builds on Omnifone's existing MusicStation subscription-based music download program, which has more than 30 carriers signed up worldwide, including Vodafone in the U.K. (No U.S. providers, however.) It's supposedly due out in the first half of 2008.
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Later this year, MusicStation Max will offer unlimited free music downloads to LG handsets.
(Credit: Omnifone)MusicStation Max will give carriers some leverage against Nokia's forthcoming Comes With Music service, which is due out late this year. That is, if people like the idea of paying a bit more (how much?) up front for free music downloads, carriers will be able to offer them phones from other handset makers, and won't be locked into Nokia's hardware, service, or prices.
But that's the big question: will people like the idea? With both services, there's an expiration period after which customers either have to buy a new phone to keep using the download service (although they will be able to keep the songs they've bought), or move to a monthly fee. Similarly, songs will be playable on phones and PCs only, and won't be burnable to CDs or transferrable to other types of devices.
So the success of such a service depends on whether people are truly ready to make their cell phone their primary source of and playback device for music. I know that people live on their phones, but I think an Internet-connected computer's hard to beat--you have nearly infinite selection and pricing competition, immense flexibility once you've gotten the music onto your computer, and the ability to hook it into all sorts of playback hardware for better sound quality.
Regardless, though, both Nokia and Omnifone are taking important steps toward the only logical future business model for the music industry, in which the cost of unlimited "free" music is subsidized by pooled payment from customers to some third party, be it ISPs, hardware manufacturers (PC, portable music player, cell phone, flash memory stick, whatever), or music software companies. That's the only economically sensible way to compete with piracy.
Matt Rosoff is an analyst with Directions on Microsoft, where he covers Microsoft's consumer products and corporate news. He's written about the technology industry since 1995, and reviewed the first Rio MP3 player for CNET.com in 1998. He is a member of the CNET Blog Network. Disclosure. You can follow Matt on Twitter @mattrosoff. 
