Mobile song fees should drop, Universal CEO says

NEW YORK (Reuters) - Cellphone providers need to cut the price of wireless song downloads if they want the market for such services to grow, Universal Music Group Chief Executive Doug Morris said on Tuesday.

Song downloads to cellphones cost as much as $2.50 per song compared with the standard price of 99 cents a song for downloads to desktop computers.

"I think the prices will come down," Morris said at the Reuters Media Summit in New York. Universal Music is owned by French media giant Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz).

Morris disagreed with the idea that consumers would pay more for the convenience of downloading a song while they're on the go or sitting with their phone at a sports arena.

"The idea of the high price ... is based on the fact that if you're in the ballpark and you want to hear a song, you get that added comfort for the extra money," he said. "When you're at a ball game, enjoy the ball game."

U.S. mobile network operators such as Sprint Nextel Corp. (S.N: Quote, Profile, Research, Stock Buzz) and Verizon Wireless, owned by Verizon Communications (VZ.N: Quote, Profile, Research, Stock Buzz) and Vodafone Group Plc (VOD.L: Quote, Profile, Research, Stock Buzz), have set up digital music stores for wireless song downloads in an effort to boost revenue as phone call prices keep falling.

According to technology research firm Ovum, the global market for sales of complete songs over wireless will grow from an estimated $2.5 billion in 2006 to $9 billion in 2010. The North American market alone is expected to triple to $154 million in 2006 from $50 million in 2005 and surge to $1.2 billion in 2010.

Morris also said that the price of ringtones, which sometimes sell more than the full songs that they are derived from, would also likely come down or risk slowing sales.

"I think (the ringtone market is) starting to level off a little bit because I think the prices are too high," he said.

But the executive said wireless would ultimately be a strong market for music sales as he expects wireless providers will adjust their pricing to improve demand.

"I think (network operators) will create everything to benefit themselves," he said.

(For more coverage of the Reuters Media Summit, please see our MediaFile blog at blogs.reuters.com/mediafile)