Napster: Future of music downloads is over the air

Huge future growth is expected in over-the-air downloads of songs to cell phones and handhelds

How many songs have you downloaded?

The average number is 375 songs, according to Napster, but the online music subscription service also knows that some users have downloaded an astounding 70,000 songs to their PCs. From there, they can be side-loaded to any number of MP3 players via a USB cable.

However, tremendous future growth is expected in over-the-air downloads of songs to cell phones and handhelds, said William Pence, chief technology officer of Napster in New York.

As a result, Napster and other online music providers are in the midst of trying to persuade U.S. cellular network providers to offer cellular pricing plans that will allow over-the-air downloads capable of supporting heavy users, Pence said at Computerworld's Mobile & Wireless World in Orlando.

"Your phone is now your MP3 player. We've seen a steady increase of cell phones and handsets ... and even BlackBerry now beginning to move into entertainment," Pence said. "There's a worldwide explosion of all kinds of innovative devices, not only handsets but entertainment devices in living rooms and cars."

While over-the-air music downloads are common in Asia, U.S. cellular providers "are not as far along, and there is fear [for some carriers] about what it all means," Pence said. "We believe in an all-you-can-eat model, but carriers say there is a potential for swamping the network."

In an interview, Pence said U.S. carriers should drop steep fees for large downloads. In most cases, users would not swamp the networks in a practical sense, but users perceive the steep pricing rates as a disincentive.

Napster is finishing a deal with NTT Docomo in Japan to provide over-the-air downloads there, he said, showing that some carriers are not as concerned about clogging the networks.

The U.S. online music industry is about 10 percent of the entire US$34 billion global market, but will grow to about 35 percent of the market in 2010, Pence predicted, putting it just behind Japan in 2010. Even in 2010, Japan will still have a greater percentage of downloads over-the-air than the U.S.

As over-the-air downloads grow, carriers and online providers may work together on subscription plans to attract users instead of pricing songs for 99 cents each or more. Subscription plans tend to bring more downloads per user. "If you get users downloading 70,000 songs to a PC, you wonder what this might mean for mobile devices," Pence said.

In addition, ad-supported models are coming as well, Pence said.

The ads will probably target "older professionals," who are the predominant users of paid digital music services. "College students still do not pay for music, and the people who do pay are older professionals who have more money than time," Pence said.

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