Music download service unveiled for digital radio

By Jeffrey Goldfarb

LONDON (Reuters) – British consumers are set to be the
first in the world able to buy songs instantly as they listen
to them on digital radio, using a download service announced on
Monday by UBC Media.

The London-based radio programming producer said it would
begin testing the technology on Chrysalis Group’s Heart
station, with plans for a full roll-out by December.

It added that digital-radio-enabled mobile phones would be
available later this year.

Korean handset makers LG and Samsung Electronics have said
they expect 500,000 such phones in the UK over the next 18
months and about 10 million by the end of the decade, according
to UBC Chief Executive Simon Cole.

UBC, which is the largest independent producer of radio
programming for public broadcaster the BBC, said it expected
the digital music download (DMD) service to generate 95 million
pounds ($173 million) of turnover by 2012, with a profit of
nearly 10 million.

Cole told Reuters the estimates were “very, very
conservative,” based on 1.2 million users and only five digital
radio stations, out of approximately 40 available now.

The forecast assumes that in six years 25 percent of mobile
devices will be equipped with digital radio service, and that
10 percent of the people who own them will buy downloads, with
each user purchasing six songs a month on average.

“Because we own most of the interactive digital spectrum in
the UK, we’re in position to create a barrier to entry,” Cole
said, adding that UBC was working with the other spectrum
owners, BT Group and Carphone Warehouse founder and CEO Charles
Dunstone.

Consumers would pre-pay for songs using a similar credit
plan as is commonly used for mobile phone calls. Each song is
expected to cost about 1.25 pounds, 60 percent more than the 79
pence for tracks bought from Apple Computer’s iTunes service,
but less than the 3 pounds often charged for ringtones.

“We believe there is a premium of some kind in the mobile
environment,” Cole said.

Impulse song purchases from UBC’s service also will be
designed for simultaneous downloading to a Web-based music
library that is compatible with other music players.

“It’s the right sort of model, and one of the key factors
is that the mobile content-buying demographic has a much
younger skew than on the PC,” Jupiter analyst Mark Mulligan
said.

“I don’t think it’s destined to be the mobile iTunes,
though, because that dominance on the PC is unique,” he added.
“The mobile space has so many dynamics in the strategy chain
and is balkanized by all the different operators, that the net
result is there won’t be a dominant model on the mobile.”

The DMD trials will start in Birmingham at the end of July,
UBC said, with Cole adding that licensing deals had already
been reached with all four major music companies.

U.S. subscription satellite radio services from XM and
Sirius enable consumers to record songs they’ve heard for later
playback, but to buy them requires additional steps and
synchronizing with a computer.

UBC separately announced on Monday that its revenue for the
year ended March 31 grew by 22 percent to 19.4 million pounds,
and swung to a 349,000-pound operating profit from a loss a
year earlier.