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Warner Music boss Edgar Bronfman has finally admitted that the record labels effectively went to war with their customers, and warned the carriers not to do the same thing. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won” reports MacUser. He points out that fewer than 10 percent of mobile phone owners buy music on their handset, and the vast majority of that is ringtones. This may be a direct analogy — before digital music and the internet the labels pretty much had a lock on music distribution, but when that changed they didn’t change fast enough. At the moment the carriers have an industry monopoly on mobile communications, but with an increasing number of WiFi networks and the upcoming spectrum auction that may change…
Of course, the average operator still gets the vast majority of its revenue from voice, but they are looking for data, content and services to take up the slack as voice revenue falls. Bronfman called the content that consumers are being offered “boring, banal and basic” and said they want interesting content that is bought with a single click. True enough, but I’d also add “for a reasonable price”. Warner may be offering some interesting bundles, but if they cost too much people won’t buy them — so all the companies in the value chain have to agree on reasonable revenue shares for the content.