MOBILE MUSIC: ON YOUR MARKS

nandf_features_808.jpg

The market for full-track music downloads to mobile devices is confidently predicted to lead the next step-change in the mobile business. The handsets are available now, with enough memory and good sound reproduction; so what’s slowing the boom in paid-for music downloads?
If you want to download a music track to your mobile phone, in most cases you’ll be paying twice. The content itself will probably cost something between 99p and £1.50, but there will also be a charge for the data traffic required to deliver the content – and depending on the length of the song, that could add as much as £8 to the total.

If you think that might be a deterrent to more widespread adoption of full-track downloads and other rich media content, you wouldn’t be alone.
So a recent launch by mobile music specialist New-Visions and the premium mobile content provider mBlox deserves some attention. Basically the two companies have set up a system, which enables content owners and publishers to sell direct to the consumer without having to bear the cost of network data fees. To the consumer it looks like a flat-fee, one-charge-only mobile music download service
New-Visions is providing the content on behalf of the record labels currently involved. Its technical partner Cube:80 delivered the core software, a Digital Rights Management (DRM) solution integrated with its Direct-To-Consumer WAP hosting, content delivery and billing platform. This will be the first time this sort of technology has been trialled outside the network portals, allowing consumers to pass rights-protected files on to their friends.
That’s clever enough, but mBlox’s contribution is probably as fundamental. mBlox built the transaction engine that ensures everyone involved receives their due. Crucially, this has involved mBlox fixing up a wholesale data tariff deal with one operator – Vodafone – to make the service possible. Initially it will be available only to Vodafone customers, but Orange expects to offer this service shortly and the other UK operators are expected to follow suit within a few months.

The first mobile download services will be available on the official Ministry of Sound mobile internet (WAP) site and new WAP site that New-Visions has built for V2 (formerly Virgin Music). Tracks will be available from MoS acts such as Studio B, Boogie Pimps and DJ Sammy, and V2 artists including Stereophonics, The Rakes and Lethal Bizzle.
Other content players will be able to use the new model in next few months, and they’ll be able to go direct to the consumer in the same way rather than through an operator’s WAP portal or a mobile retail portal. For this kind of wholesaling of data charges to work effectively, of course, all the operators will have to support the pricing model; limiting the service to customers of a single network obviously prevents mass take-up.
It seems likely that the operators will be able to negotiate some kind of veto over who exactly would be allowed to take advantage of the discounted data rates.
But mBlox and New-Visions are putting a dent into the networks’ knee-jerk defence. And that is a key issue. The growth prospects for all off-portal content, including mobile music downloads, are currently tied to the networks’ data charges. Third parties are effectively frozen out, because only the operators could offer a price per track with no additional data download charge. That effective monopoly is the reason for the networks’ prominence in music download services – indeed, 3 says it has provided over 53% of mobile audio track downloads since the start of 2006.

The data charges levied by the networks for downloaded content aren’t just anti-competitive in practice: they are often cited as one reason for the slow uptake of rich media services on mobile.
Doing the wholesale deal with Vodafone means that the data tariff is low enough to be included with the cost of the song by the seller – the two record companies, in this case – so that the consumer pays a single charge for both content and download. In particular, Vodafone users who buy music from MoS or V2’s WAP sites will not incur any data charges on their mobile bill. mBlox says its wholesale data rates make it possible to offer a ‘per track’ price of around £1.50 and still generate profits for everyone involved – the service provider, artists, labels and content provider.
Julia McNally, director of New-Visions, said, “New-Visions has launched many official WAP sites for artists on the V2 and Ministry of Sound labels before but the data charges were just too high to support music downloads. With the mobile music business – from ringtones to full-track downloads – now worth £3.2bn, wholesale data tariffs will enable music labels and artists to bring music and video downloads directly to consumers on the move.”
“We feel that D2C is the way forward for us said Patrick Hagenaar, mobile operations manger at the Ministry of Sound. “It’s easier for us to interact with our customers, build lasting relationships and as a result offer a wide range of dance music downloads according to their needs, rather than being restricted to operators’ priorities. There is a lot of great dance music out there, which is big in the clubs, but doesn’t get a chance to be sold as music downloads through the mobile operators, so this is a great opportunity.”
Milestone
Andrew Bud, executive chairman of mBlox, was even more enthusiastic. “This is a colossal milestone in the story of mobile entertainment” he said. “I hope that other mobile operators in the UK and other countries will follow suit soon.”
And Jolyon Barker, head of Deloitte’s technology, media and telecoms practice predicted that this kind of cost-cutting move will lead to an increase in the number of online music stores. Indeed, Deloitte reckons, “a fifth of music sales will be distributed digitally by the end of 2006.” Digital distribution is occupying a growing share of revenues for the music industry; a reduction in data charges for downloading to phones will continue to boost this revenue stream and spur the use of mobile data, according to the analyst.
“Digital music sells best when sold in the most appropriate format for the end devices, as shown by the market for ringtones – designed specifically for mobile phones and mobile phone networks – which is expected to generate over $5bn in gross revenues in 2006” noted Barker.
“A reduction in the cost of music over mobile phones should prompt a more dramatic change in the share of music sales by format, and we expect that a fifth of music sales will be distributed digitally by the end of 2006.”
He also feels that a reduction in the size of full-track music files sent to mobile phones could further boost the market, making files quicker to download and using up less of the mobile network.
He suggests that a growing number of online stores will cater specifically for downloads to mobile phones over a mobile network, and he also expects to see growth in the number of specialised online market channels catering to progressively smaller niches.
This could be done by creating sub-brands and speciality brands each of, which could focus on a particular genre such as ‘opera’ or ‘urban’. “Speciality sites could also offer content at varying quality levels and in various packages, depending on the needs and preferences of their particular niche,” he said.
“For example, opera lovers might demand CD quality downloads, and younger audiences might find renting music packages containing perhaps a half-dozen tracks more appealing and affordable than full albums.”

Creative content discovery
The next major hurdle is probably content discovery, telling the consumer what’s available and where to find it. This is a key part of the user experience, and it will probably take a while before the market reaches sufficient size to attract creative solutions and investment in promotion.
One obvious option is to provide effective links from existing mass-reach marketing channels such as TV and print (newspapers and magazines). Several companies are working on barcode systems, notably the payment platform provider Bango; a phone’s camera is used as a barcode scanner to read details of a product from an advertisement or a directory, and that information can take the consumer directly to the relevant WAP site and even start the download.
This works well, provided the phone owner is incentivised to take the trouble to scan the barcode. The stumbling block is the need to install appropriate software on the phone before any scanning can be done. And since there are no agreed standards in this area, the scanner application has to be specific to the barcode.
If barcodes are a way forward, some standardisation is surely required.
Another option is the kind of embedded Bluetooth-based ‘tag’ developed by companies like Hypertag. A tiny and relatively simple electronic device is installed in a poster panel or a dedicated unit, and anyone who passes close enough with a Bluetooth-enabled phone will be sent the information stored in the tag – which could be a direct download of a game or a music sample, or merely a text prompt.
There are a couple of drawbacks – the Bluetooth phone has to be on and set to discover compatible units, and it is relatively expensive to embed the tag in the first place. Against that though there is a major plus: no extra software is required on the mobile device.
The content discovery issue will probably attract a number of workable solutions over the next few months, and there’s a good chance that bigger
web portals will arrive on the full track download scene – the likes of Yahoo!, AOL, Google, MSN, and maybe Apple too. They can bring a lot of clout to bear on both network charges and content marketing. The mobile music business could well be a very different place in 12 to 18 months’ time.

The following two tabs change content below.