Mercora, which operates a popular Web-based music service, is betting that the market for smart phones will continue to grow – 123 million of the devices are already in use, according to Canalys Research – and that smart-phone users on the go will prefer listening to music on their cell phones rather than on MP3 players like the iPod. “Convergence is happening,” says Srivats Sampath, Mercora’s CEO. “You can get voice and entertainment in a single device, now that the proliferation of 3G is delivering fast bandwidth into the phone.”

100,000 Music Channels, Plus Your Own Collection

Alphabet soup: Mercora's M on the Motorola Q

Other smart-phone music services available in the U.S. today let subscribers download and play individual songs, and charge them for each song. M, on the other hand, gives users access on a subscription basis to all of the music channels operated by Mercora webcasters, including 1,000 genre-based stations and 100,000 artist-based stations. Rather than downloading songs, M streams music to the phone using a player, based on the open-source Ogg/Vorbis encoder, that produces CD-like sound quality. “I could be in Santa Clara listening to music in Japan, but it sounds like it’s local,” Sampath says.

Subscribers can also set up streams from their own computers. For example, a user could create a commuting playlist at home, with music she had downloaded to her PC or copied from CDs, and then listen to it over the phone while driving to work. Of course, her computer must be left on and connected to the Internet. (Mercora isn't the first company to let cell-phone users connect to their own computers; for example, Orb’s free service lets users stream music and other media content from their home computers.)

Beginning in November, subscribers will be able to listen to music from other people’s computers, too. Each subscriber can choose up to five friends or family members as music sources  – again, assuming that these people give them permission and leave their computers Internet-connected.

One advantage of the M service over an MP3 player or a download service, according to Sampath, is that administering music collections becomes much easier. The music library exists in one place – on the subscriber’s PC – and doesn’t have to be “synced” between devices, but is still accessible from anywhere in the world.

Broadband Access Required

What makes the M service possible is the availability of broadband networks for both the desktop computer and the cell phone. M requires 3G or higher mobile networks such as Edge, EVDO, HSPDA and WiFi, and a broadband Internet connection is required for a high-quality Internet music stream.

Currently, M operates only on Windows Mobile 5.0-certified smart phones and mobile devices, but Mercora plans to implement the software on additional smart-phone platforms soon. Subscribers can listen through both wired and wireless headsets, including stereo Bluetooth.
 

Promise – and Questions

Initial reactions to the new service reflect both enthusiasm and questions. Rob Enderle, principal analyst for the Enderle Group, says, “The only device that can take the market away from the Apple iPod rapidly -- because it is more common -- is the cell phone. Mercora M represents the most aggressive technology to date for turning a 3G cell phone into a replacement for the iPod.”

Aram Sinnreich, principal of Radar Research, agrees that consumer demand for 3G cell-phone services like music streaming is immense, and can only grow because 3G is still in its infancy; he also says M represents a step toward the “great jukebox in the sky” that many people feel is the ultimate service model for music distribution.

Sinnreich questions, however, whether cell-phone carriers – who own their entire infrastructure, unlike broadband service providers, who control only the last mile – might demand payments onerous enough to doom Mercora’s business model. Record labels, too, may fear that the cell-phone service will “cannibalize” their CD sales, even though they have not raised legal objections to Mercora’s online service. “If the labels want half and the carriers want half, that doesn’t leave you any halves as the music seller,” Sinnreich comments.

But, he adds, Mercora has an advantage as a first mover, and if it proves its concept by attracting a large number of subscribers very quickly, then carriers might be encouraged to help keep the service in business, either by making their networks available on more favorable terms or by reselling the service under their own brands, as some of them are currently doing with music download services.

From September 26 through October 31, M is offered as a free preview. After that period, the service will be available at an introductory price of $4.99 per month. Subscription packages for the M are as follows: $29.99 for six months, $49.99 for a year, and $99.99 for a two-year subscription. The Mercora online service is free of charge.  Consumers can download and install the service directly from http://www.mercora.com/M.