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Summary:

Mobile music has long failed to gain traction despite a tremendous amount of hype, but recent announcements about cloud-based services have reinvigorated the space. But as carriers and record labels should know, the only certainty in mobile music is that old business models don’t apply.

A slew of recent headlines about cloud-based services have revitalized a mobile music space that has long failed to live up to ridiculous hype. The NPD Group last week reported that an amazing seven or eight million iTunes users would pay $10 a month for a cloud music service that gave them to access their music libraries across devices and platforms. Apple, Google and Microsoft are all in various stages of rolling out cloud-based services that extend to mobile, joining relative veterans in the space like Rhapsody and Thumbplay as well as startups MOG and Rdio.

But while Apple enjoys the benefit of using music as a tool to further its lucrative hardware business, all of those other players will have to find a viable business model.

As I discuss in my weekly column over at GigaOM Pro, carriers and record labels have pinned their hopes on music since before the bottom fell out of the lucrative ringtone market, but the track record is a miserable one: Sprint unsurprisingly failed to entice users to spend $2.50 per song when it launched full-track downloads in 2005, and Verizon Wireless’s original V Cast Music was such a debacle that it was overhauled 18 months later and still appears to have few fans. No other premium mobile offering has made much of a dent either.

There is no shortage of reasons for those failures, of course. But the economic flaw in both full-track downloads and cloud-based streaming services is the same: Delivering music to on-the-go users (via downloads or streaming) costs more over cellular networks than it does over the fixed-line Internet. Operators who deliver content over their networks want a piece of the pie, but margins in the subscription-music business are already razor-thin. And as AT&T’s data calculator shows, consumers on a metered billing plan (which soon will be most of us) can rack up usage pretty quickly listening to tunes on the go: Enjoying just one hour of streaming music every day eats up nearly half of the monthly data allotment on AT&T’s high-end plan.

So every player in the value chain will have to experiment with innovative new offerings and revenue streams as they try to monetize their content in mobile. Because only one thing is certain in the world of mobile music: The old business models simply don’t apply.

Read the full post here.

Image courtesy Flickr user mercury vapour.

  1. Google might have the edge here. Already, playing Youtube music videos on 3G phones work fine.

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    1. Colin Gibbs Monday, July 19, 2010

      You may be right, Tim — especially given Google’s expertise in generating advertising revenue, and ad dollars will have to play a big role if mobile music ever takes off.

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  2. Just buy an app that writes music on the spot, ala Band in The Box. Need a Muddy Waters number, there’s a template for that. Boy band? Girl group? Euro beat? All at your fingertips. No need for connectivity, no need for royalties, no superstars, no divas, no poptartlets, no $100 tour tickets. Muzak to the nth degree. What difference does it make any more? In 10-20 years this will seem like prophecy. There still will be artists, but they will hold 5% of the listening time and will be fighting for every dime.

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    1. Colin Gibbs Monday, July 19, 2010

      That’s an interesting viewpoint, Yacko, but I don’t think any app or technology will ever replace real musical talent. No formulaic software can replace great songwriting and performing.

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    2. I run a small company whose technologies are often (mis)attributed to scenarios like the one you describe. (We map music genomes for the sake of composition, just as Pandora does for recommendation.)

      To help enumerate a few of the reasons why the generative music utopia you imagine here is unlikely :

      1. As Colin suggests, nothing can or will ever replace the creative human spirit.

      2. Listeners who want Muddy Waters want Muddy Waters, not some algorithmically composed afternoon talkshow commercial music bed supplicant.

      3. Most of the professionals I know in this space would probably cringe at the outcome you suggest, let alone put effort or resources into making it a reality. We are huge music fans and thus highly sympathetic to the plight of contemporary artists.

      4. The highest purpose of generative music systems is not to replace the person, it’s to replace the OTHER person. The collaborator. The muse. The cowriter. The id. These systems can make songwriting easier, but I don’t think they’re ever going to spontaneously compose the next Bohemian Rhapsody.

      The boon for this market is coming, to be sure, but the sublime applications will be to elevate the game rather than steal the ball.

      /rant

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  3. There is no shortage of reasons for those failures, of course. But the economic flaw in both full-track downloads and cloud-based streaming services is the same: Delivering music to on-the-go users (via downloads or streaming) costs more over cellular networks than it does over the fixed-line Internet.

    – I disagree. Millions of consumers are already predisposed to sync their i-pod/i-phone to i-tunes via their PC and Rhapsody already overcomes the need to access wireless connection by offering offline playlist caching, so you can play music even when you lack an internet connection:

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  4. More simply, there aren’t enough people who listen to music that are savvy enough to figure out where lists go, store files, blah blah blah. It has to be super easy. iTunes accomplishes that, for the most part, and yet there are still LOTS of people who struggle with how to plug a cord into their phones. Don’t ask them to sync with the cloud, they have no clue what that means. Give them a big bright red button on their screen that says “My Music” then fill it with all kinds of songs and tell them it costs $10/month for 1000 song plays. That will satisfy the majority of Rihanna/TI/Beyonce lovin’ people. However, the fact is that everyone will continue to be feeding off the scraps that Apple tosses to them, because a hardware/software service combo is the magic recipe, and Apple is the only one to have aced that – Sorry Microsoft.

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