Music is newest cellular frontier

By Yuki Noguchi
Washington Post

First, there were musical ringtones. Then came "ring-back" tones — tunes that play while a caller waits for someone to pick up a mobile phone. Now cell phones are offering streaming music, with access to online music stores on the way.

The wireless industry is making a big push into the music business, taking cues from Apple Computer Inc.'s iPod.

Verizon Wireless said last week it plans to offer a music-store service and a music-player cell phone around the end of the year. Cingular Wireless LLC is considering a similar deal with Motorola Inc. and Apple's iTunes music store; Napster Inc. and Swedish phone maker Ericsson plan a similar joint venture.

"Apple ... has created such success that everyone's eyeing it and wants a piece of it," said Darcy Travlos, an analyst with market-research firm CreditSights. But there are pros and cons to combining cell phones and music players.

The primary appeal of the cell phone is its ubiquity; nationally, more than 60 percent of people carry one. The success of other functions, such as picture messaging and ringtones, is bolstering the case that the cell phone could become the Holy Grail of consumer electronics: the all-in-one device.

But some skeptics point out mobile music has yet to make a big splash in Europe and Asia, which tend to lead the United States in wireless trends.

Music on cell phones comes with some tradeoffs, said Ping Zhao, a senior analyst with CreditSights. It's difficult to replicate the iPod's simplicity on cell phones. And, to make mobile music profitable, cell-phone companies must strike a price low enough to appeal to customers and high enough to cover licensing payments.

But digital music in general is far outpacing its hard copy equivalent, growing rapidly while CD sales have declined since 1999, Travlos said.

"The music category — everything from ringtones to ring-backs to video — is just beyond hot," said Jeffrey Nelson, a spokesman for Verizon Wireless.