Blog Post

MidemNet Mobile: Market Realities in Perspective

[by Mark Frieser] The next panel of note was an all star-cast from carriers, labels and aggregators holding court on the outlook of the mobile music industry, aptly titles Theory Vs. Market Reality. This panel, featuring Michael Nash, SVP Digital Strategy and Business Development, Warner Music Group, Nancy Beaton, GM, Wireless Music and Personalization, Sprint PCS, Rio Careff, GM, Universal Music Mobile (US), Guillaume Decugis, Ken Ohtake, EVP, Sony Music Publishing (Japan), and Ben Lister, Commercial Manager, MTV Networks, pinch-hitting for Greg Clayman, VP of Wireless Strategy at MTV, was a frank discussion of where the revenue stream are coming from, and where they (at lest where the industry hopes) will come from in the future.
In terms of the market, where it is and where it is going, Rio Careff that UMG sees non-ringtone revenue streams at their very beginning, that they represent a small percentage of the market for the company, and that ringtones represent 40% of the digital business for UMG – so for the present, the company, while it derives a large part of its digital revenue from ringtones, hopes to develop a more diverse revenue portfolio. This is in stark contract to the Japanese music market, where according to Ken Ohtake, a staggering 96% of Sony’s full-track downloads are mobile-phone based. And from the carrier point of view, Nancy Beaton of Sprint stated that 95% of the revenue from ringtones on her service are master-based ringtones. In terms of MTV, Ben noted a 60/40 split in favor of carrier deck services at MTV.
As for Warner Music Group Nash stated the company is seeing a very real transition in the marketplace to full track, with the highest growth in Japan, where the company recently launched a 500 yen (approximately $4.30 US) bundle selling ringtones, images and other content in a package – which has served to both promote the album and Madonna as a whole and to develop a new and important revenue stream for Warner. Careff followed Nash in stating that better marketing efforts, support and promotions are needed to make mobile efforts successful.
Beaton countered that though artist based content marketing efforts are interesting to the consumer, the labels and carriers have to be careful not to confuse user buying patterns by changing from a product-oriented distribution model to one that is artist oriented without close collaboration between carrier and label.
In terms of aggregators, all agreed, with some qualification, that aggregators and 3rd party retailers are important – so long as they bring added value – whether through marketing or superior distribution and packaging. That said, the reality is that unless aggregators bring technology or marketing to the fore, any real chance of complimentary development is slight, with carriers and content owners alike curtailing licensing and collaboration with aggregators that so not enhance the brand.
In terms of promotion via mobile, Nash provided the following statistic: in 29 markets Madonna’s new single went to #1 with 40% less airplay in comparison to other #1 hits – many of those markets were places where an emphasis was places on mobile marketing – which shoes that marketing and development of music with carriers is crucial to launching product.
So it seems that at then end of the day, though ringtones account for the lion’s share of mobile revenue, all relevant parties are seeing positive empirical results of mobile-based and mobile-blended campaigns… this is what the promise of mobile is really all about… let’s hope in 2006 mobile becomes one of the primary tools for the distribution of all types of music products.