Vodacom to Boost Data Revenue With Music Download Service

Digital Content

Vodacom expects a fillip to its data revenues when it becomes the world's fourth operator to launch a new music download service.

MusicStation is a more sophisticated version of the mobile music phenomenon that has gained a niche following among cellphone users. The version due to launch in December will let users choose from 1-million tunes, download them without paying data transfer fees and let them listen to the tracks as often as they want, for R25 a week.

"Both ourselves and Vodacom believe we will see a marked increase in revenue derived from digital music downloads," said Warren Carley, regional commercial director for software developer Omnifone. "Vodacom expects it to be exceptionally popular."

Carley would not say how many of Vodacom's 23-million customers are expected to subscribe. Nor would he say how the R25 weekly fee would be divided between Vodacom, Omnifone and the record labels and musicians.

Data accounts for only 8% of Vodacom's annual revenue now, with CEO Alan Knott-Craig convinced it will generate a far larger slice of its future income.

Music downloads had not yet been as lucrative as the cellphone industry expected, Carley said. The average UK subscriber spent £6 to £36 a year, by paying for each track.

"You can't run a business on that by the time you have paid the labels and split the revenue," he said. MusicStation's subscription service should almost double what the industry was earning now, he said.

While record labels complain that the industry is being harmed by piracy and illegal download services that pay no royalties, four big record labels are backing MusicStation, as they are guaranteed an income.

The system monitors how often each track is listened to, so musicians can be paid each time their track is played. An Omnifone team in SA will provide local music content.

Business Day