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Making Mobile Music Work:
SK Telecom
2m Subscribers by June 2005
South Korea’s largest cellular company, SK Telecom, has provided
a mobile music portal service called ‘MelOn’ since the
end of 2004. MelOn is the first integrated, wired and wireless,
music service that allows users to enjoy music virtually anytime,
anywhere using a portable MP3 player, a PC, or a mobile phone.
The main MelOn interface is a music download and streaming Internet
portal, www.melon.co.kr. The service is akin to a rental service,
with users “renting” tracks on a monthly basis for use
on various terminals. MelOn users pay a 5000 won (US$4.50) monthly
subscription to stream music to a PC or download tracks to their
phone as long as their subscription is current. Digital rights management
(DRM) wrappers on the music guarantee a subscriber is current, and
tracks are erased from the end-user’s library at the end of
the subscription period. To download tracks onto the handset, users
pay for airtime at regular call rates, regardless of the size of
the track.
The key to the model is its ubiquitousness, downloads are possible
using wireline and wireless platforms, and a relatively affordable
monthly subscription fee. SK Telecom acquires the rights from the
record companies for music to use as ringtones, ringbacks and full
version downloads. Music companies are not necessarily enamored
by the scheme, but SK Telekom has generally used its market heft
to have its way. To further strengthen its position, SK Telekom
acquired Korea’s YBM Seoul Records, reportedly Korea’s
largest record company.
The MelOn service has received tremendous response from the marketplace,
with the number of purchasers and paying subscribers virtually doubling
each month. As of early June 2005, MelOn had recorded 2m subscribers;
the number of paying subscribers that enjoy an unlimited amount
of music for a monthly flat fee increased as well, reaching 470,000.
According to SK Telecom, the site ranked first among Korean paid
music sites in terms of revenue.
Source: Pyramid Research (pyramidresearch.com)
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