KDDI's 3G ARPUs Increased by Nearly 40%

US : During their first quarter of offering mobile music services, SK Telecom saw more than half a million mobile music subscriptions and KDDI's 3G ARPUs increased by nearly 40% says the new Pyramid Research report, "Get on Track with Mobile Music: Exploring Mobile Music Best Practices." Mobile music is promising for all stakeholders, but its success hinges on operators and content providers applying the right business models to increase mobile data usage and prevent illegal P2P sharing.

SK Telecom and KDDI have implemented two variations of the mobile music business model, each with some success; KDDI uses the traditional model of selling tracks individually while SK Telecom has pioneered a subscription based model with a monthly fee. The music industry has come to favor the more familiar single track purchase model, but Pyramid Research Senior Analyst Nick Holland argues that "the subscription model may hold the key to drive revenue and lessen piracy through continuous, predictable revenue streams and the promotion of additional purchases."

Mobile network operators need to apply a successful model or risk being cut out of the mobile music value-chain in a disintermediation process. Mobile music will drive demand for sophisticated (and expensive) handsets, as well as increase data ARPUs if carriers can replicate models that encourage over-the-air downloads, as seen with KDDI's 'Chaku-Uta Full' service. Challenges to simply replicating the Japanese and Korean mobile music models exist, and Holland cautions, "Pay music services have set the bar at 99 cents per track. Operators will be able to charge a slight premium for mobile access to music, but European and North American markets will not support the $3 price tag found in Japan."

About "Get on Track with Mobile Music: Exploring Mobile Music Best Practices"

Through an in-depth analysis of KDDI and SK Telecom's services, this report emphasizes that mobile music can be offered successfully, and outlines the key prerequisites to such success, including business models, enabling technologies, stakeholders, and global developments.