The latest entry in the music-downloading game comes from Motorola Inc., until now a straight-down-the-line hardware company. Why is it jumping feetfirst into services? Because, right now, that is where the action is.
Of course, the price of oil is high now, too, but that doesn't mean Motorola should start wildcatting. In fact, the Schaumburg, Ill., company may have bitten off more than it can chew.
Motorola bills its new service, called iRadio, as a total music system for the car, the street, and the home. Customers will need a special cellphone costing at least US $55 when purchased with a cellphone service package. They'll also need a Bluetooth adapter for their car stereo, for maybe $75. And last, they'll need broadband access in order to subscribe to the plethora of channels that iRadio will offer them, for about $8 a month. That last number--the eight bucks--is what Motorola is really after.
"It's mainly a subscription service, and we expect to make more from that than from the hardware," explains Paul Alfieri, manager, public relations, for Motorola. How will the company's gearheads fare in managing an entertainment-subscription business? They won't: "We've brought in folks from all different walks of life, and we're running iRadio out of our Tempe, Ariz., facility--away from our main set of engineers in Chicago and Philadelphia and closer to Hollywood," Alfieri adds.
Here's how it works. As a customer, you subscribe to channels that download music to your computer and then to your cellphone. You listen to the stored programming, hearing each song only once, and buy individual songs by pushing a button that marks them for downloading, then or later. When you get in your car, the Bluetooth adapter hooks the phone directly into the vehicle's stereo system, so that the song you're listening to can jump to your stereo speakers without missing a beat.
Meanwhile, when a regular phone call comes in, you can pause the song in mid-syllable. For an additional small fee, paid not to iRadio but to the cell service operator, the system can receive and store periodic weather and road reports and play them at your convenience. Finally, the phone can play your own songs, ripped from a CD or perhaps purchased from an online music store. Most downloads should work, as iRadio supports the main music downloading formats.
Why would major music labels--Universal Music Group, in Santa Monica, Calif., is the biggest one so far--agree to let iRadio break up their massive collections and beam them out in specialized channels? Because iRadio will advertise their wares, much as conventional radio stations do. In fact, a larger portion of a label's backlist of songs can hit the airwaves, because iRadio has so many channels. Also, by aggregating titles from many labels, iRadio increases the variety, which itself attracts new audiences.
In this it resembles existing online music stores, like Apple's iTunes and Rhapsody. And, like them, the iRadio system is designed to encourage impulse purchases, at a dollar or two per song. But Motorola won't see much of that revenue, because most of it will go to the record label and the cellphone service provider.