May 29, 2007 (11:05 AM EDT)
Beatnik Offers Music Format For Low-Cost Phones

Read the Original Article at InformationWeek

Beatnik on Tuesday introduced a music file format that it claims is one-tenth the size of the typical MP3 file, an innovation that would make it possible to download tunes in a timely manner on older digital mobile phone networks found in emerging markets.

The format, called Mobile XMF, would work in conjunction with Beatnik's music player, which would have to be preinstalled on the phone. Beatnik believes there's a market for music downloads in Eastern European countries, China, Latin America, and India, where manufacturers sell lots of low-cost phones.

"What we see [in these countries] is a disconnection between users who want to buy music over the air, but don't have the phones that can do that," said Jeremy Copp, chief sales officer for Beatnik, based in San Mateo, Calif., in an interview.

The reason for the disconnect is the lack of wireless bandwidth on GPRS data networks found in emerging nations, according to Copp. The networks, which deliver downstream data rates up to 80 Kbps, have considerably less bandwidth than more advanced 3G networks in developed nations. In addition, most of the phones connected to the GPRS networks are low-cost and less feature-rich than more expensive smartphones.

Beatnik's technology would make it possible for wireless carriers to increase revenue from inexpensive phones by licensing the company's smaller file format to deliver music to teenagers and young adults, who are most likely to subscribe to such a service, Copp said.

Beatnik's technology could also offer handset manufacturers a way to get a little more money for their handsets. Some phone makers have managed to increase market share in terms of shipments by selling inexpensive products to emerging nations. At the same time, however, these companies have suffered a decline in average selling prices. Motorola is an example of a company that has started moving away from low-end phones in trading market share for higher per-phone profits.

To be successful, Beatnik will have to convince carriers that the return on investment would be worth the cost of licensing the company's technology and converting music files to Mobile XMF. Manufacturers may be an easier sell, given that most of the top cell phone makers ship handsets with Beatnik's technology for playing ring tones.

The software is embedded in chipsets sold by Texas Instruments and other chipmakers. To play full songs, the manufacturers would have to add another layer of Beatnik software. Handset makers that sell phones with Beatnik technology for ring tones include Nokia, Motorola, Sony Ericsson, Samsung, and SAGEM.

Beatnik is in the process of licensing its new technology to carriers and hardware manufacturers, Copp said. "You can expect some announcements soon from carriers and service providers who are planning to roll this technology out," Copp said. "It should be in the near term."

Because low-cost phones don't typically have a way to communicate with a PC, copyright protection is less of a problem than on more advanced phones. However, Beatnik technology can work with any digital rights management system, Copp said. In addition, while the file format is smaller, it maintains the same sound quality as standard files and allows for immediate playback during the download process, he said.