Hidden costs of music downloads

Consumers may be facing data charges of up to £10 to download a single song, according to new research from mBlox on European data pricing.

The research, conducted in five countries, illustrates that data pricing varies so considerably between operators that it is virtually impossible for consumers to understand the charges that apply.

Although some operators may charge as little as 75p to download a track, the small print outlining ‘fair usage’ within the Terms and Conditions effectively means that operators could charge much higher costs.

Andrew Bud, executive chairman at mBlox, stated: “2009 could be a pivotal year for rich mobile content, but for this to happen, consumers need a transparent pricing mechanism to purchase rich content. Content providers need to be sure that their consumers are treated fairly. The current hope that flat-rate data will be the total solution is fundamentally flawed as market penetration is not high enough nor is it likely to be for some considerable time.”

The most expensive cost to download an average music track of 2MB on a Pay As You Go tariff in the UK was £10, the report found. On a Pay As You Go tariff, it can cost as much as £5 per MB of data in the UK, or €5 in France. Germany is an exception, with several major service providers offering data trafficking at a reasonable 0.24€ per MB. Downloading a short video, a few minutes long at 3MB to 4MB will cost between £1 on the cheapest tariff and £9 to £20 on the most expensive tariffs in the UK.

“Ultimately we believe the price consumers see should be the price they pay,” Bud continued. “The current system of data pricing is severely restricting the growth of the mobile content market as consumers fear facing frightening bills.”

The research, carried out on behalf of mBlox between October and November 2008, incorporated online analysis of operators’ terms and conditions, as well as telephone research to customer service representatives of leading operators across Europe.
mBlox asserts that mobile operators should adopt a ‘sender-pays’ business model which, like a postage stamp, allows the providers of mobile content and services to purchase the data from the operators, so that it can pay the charge for sending the data instead of the consumer. The company can then choose to include this cost in the overall price of the service, enabling fair and transparent pricing for consumers.

Removing the threat of ‘bill shock’ from unclear data download pricing could significantly increase adoption rates benefiting the entire mobile content ecosystem, the report claimed.

Bud stated: “To rebuild consumer trust and unlock the potential of the mobile content industry, we need to complement flat rate schemes with a ‘sender-pays’ business model, which ensures that the sender is able to purchase data at a wholesale cost and consequently offer fair and transparent pricing to consumers. This solution is the best way to realise the potential of the mobile content industry and develop a flourishing industry.”