Our take...
Vodafone already offers Omnifone's music rental service, MusicStation, with unlimited access to music for £1.99 a week. Since launching with Vodafone, MusicStation has overtaken Napster in subscriber numbers to become the largest digital music rental provider in the UK. Unlike MusicStation, Vodafone Music provides permanent full track downloads. It is doubtful that users will pay twice for the same track. However, given the different business models the two services are using, they are not likely to attract similar users. Rental music targets the heavier user who is not particularly bothered with ownership, whereas the a la carte Vodafone Music service rather targets the more casual user. It is essential for operators to improve both the range and usability of their mobile music offerings if they wish to compete in the market in light of 1) the rise in cheaper off portal services and 2) the trend to sideload music from computer to mobile, avoiding data download charges. The improved search capabilities of the Music Store will certainly enrich customer experience, necessary to drive further uptake. By offering both business models Vodafone's mobile music site addresses a larger market and increases its potential revenue from music.

Vodafone offers MusicStation bundled into voice tariffs above £40 a month. MusicStation Max, a service offering MusicStation for 'free' with the purchase of specific handsets, is set to launch later this year. Operator deals are yet to be announced for the service. Bundling music into voice tariffs or handset sales encourages the consumer to see the service as free. As such, if MusicStation were to include links to Vodafone Music (not currently available), it is possible that the two services could complement each other with the former acting as a music discovery service: something which could increase traffic to the Vodafone store. Without this link, the two music services remain separate and those who purchase the bundled music handsets are unlikely to buy additional music from Vodafone Music.

Given the continued promotion of MusicStation by the operator, it would seem that Vodafone is keen to maintain the service. Screen Digest believes that the decision made concerning MusicStation Max will indicate whether the operator plans to introduce subscription services of its own with RealNetworks following its service upgrade or if it is happy to continue with Omnifone.