iPhone May Not Rock Music Industry

The Associated Press
Tuesday, June 26, 2007; 7:21 PM

LOS ANGELES -- Carlos Gomez could be the recording industry's ideal mobile music customer. His phone is his music player of choice and he spends about $100 a month buying songs for it _ often on impulse after hearing a tune on his car radio. That's why he's not buying an iPhone.

It's not that he doesn't want one. The 24-year-old office clerk is mesmerized by the look and feel of Apple Inc.'s uber-sleek new phone that's a combination cell phone, iPod media player and Web-browsing gadget. He particularly likes its touch-screen navigation.

But Gomez says he won't buy the handset because users can't use it to buy and download music over a wireless network.

Instead, iPhone owners will have to buy music via their computers and then download it to their phones, a process called side-loading.

"I'm not the type of person that likes to wait until I get home," Gomez said. "If I hear it, I want it there and then."

The arrival of the iPhone on Friday has stoked optimism among some music company executives that it will usher in a new wave of easier-to-use mobile music devices or even entice more people into embracing the phone as music player _ and into buying more music.

"The introduction of the iPhone is an enormously positive event," said Warner Music Group Corp. CEO Edgar Bronfman Jr. at a conference earlier this month in New York. "It creates more and more consumers who are looking to buy music, but it also galvanizes the mobile industry to compete."

Some analysts, however, say mobile music sales will be dampened as long as users are limited to loading music on their phones via their PCs and Macintosh computers, and blocked from buying music wirelessly.

"The whole idea of on-the-go instant gratification isn't there," said Ted Cohen, managing partner of media consulting firm Tag Strategic.

Currently, Sprint and Verizon Wireless are the only wireless network operators in the U.S. that directly sell full-track downloads for mobile phones, a process referred to as over-the-air downloads. Even so, they trail Apple's iTunes Music Store in digital music sales.

In all, about 386 million digital tracks so far this year have been purchased online or downloaded over-the-air in the U.S., according to Nielsen Mobile. The firm does not break out figures for over-the-air purchases.

About 4 percent of all mobile phone users in the U.S. and 27 percent of those with MP3-capable handsets side-loaded music onto their phones in the first quarter of this year, according to a survey by research firm The NPD Group.

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