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@ MWC Interview: Rob Lewis, CEO, Omnifone: Freeing Mobile Music

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Omnifone’s MusicStation, a subscription mobile music service giving all-you-can-eat music for £1.99 a week, clocked up over 500,000 track downloads within 10 days of debuting on Vodafone (NYSE: VOD) late last year. But that version might be a drag for network-hopping pop fans, so Rob Lewis was in Barcelona touting new MusicStation Max – a version that, like Nokia’s (NYSE: NOK) Comes With Music, bundles unlimited free songs in to the handset cost.

Right now, there’s only Universal repertoire and no carriers have yet committed to the idea – but more labels are “only a matter of time”, network discussions are “ongoing” and it’s hard to believe talks didn’t take place around Mobile World Congress, where Universal SVP Rob Wells said the “celestial jukebox” is the “utopian future”. Lewis gave me a sneak preview of the prototype LG (SEO: 066570) handset that demonstrates the idea…

Turning a corner: MusicStation Max will have OMA 2-grade mobile DRM and controls on the parallel desktop version. Lewis: “You can’t download 1.5 million tracks and burn off 1.5 million CDs. Otherwise, the music industry wouldn’t be in business for very long.” Many folk think it may die anyway, but: “I actually think, in about 12 to 18 months, it’s going to go through a massive resurgence. “All of the music labels are definitively of the view that their time has come and this brave new chapter of delivering unlimited services over the network is the key to that revival.

“The music industry would rather not be making CDs. If they can monetise the mobile networks and other methods effectively, they don’t have to manufacture crystal cases, go through all the logistics, returns of millions of CDs that no-one wants to buy.”

On Comes With Music: “Nokia’s clearly been very aggressive in their services business going forward. Most of the networks and manufacturers haven’t necessarily been that committed to date. The reason we’ve got a 3G and 3.5G data network is we should be sending traffic wirelessly rather than with wires.” Omnifone will continue to offer both the subscription-based and pre-bundled MusicStation. Lewis may have to tread carefully to keep sweet operators who want to hold all the cards but who find hardware makers now in the space, but he says networks might offer the £1.99-a-week option to BlackBerry users, for example, but the full, free whack on “hero” music handsets”

How’s it work?: The handset maker pays Omnifone a fee for including its service. The mobile network then pays the phone maker and could add a specific “music plan” alongside data tariffs. Royalties are paid on a per-play basis rather than for each download (Lewis reckons it’s fairer) – tunes plucked from free-access services count in a separate UK “play chart”. Tracks take an estimated 30 seconds to download over 3G and can start playing before the download finishes. The number of tracks users can download is limited only by the size of their memory card. Users also get their song library on the desktop because new tracks downloaded to the mobile (AAC+ format) are also pushed down over wired broadband (format yet to be announced).

Devaluing music?: Some artists and managers consider taking the price tag off music to be offensive. “One can sit there and go ‘devaluation of music, it’s scary, it’s terrible’. But bottom-line is, if CD sales are constantly declining, then, eventually, the devaluation of music will be down to genuinely zero. If you want to avoid the degradation of music, you have to move with the consumer behaviour. If you ask a 15- to 25-year-old how they engage with music, the sad truth is the most likely thing they’ll say is they don’t buy CDs, they don’t have a CD collection, they don’t look at their artwork. In the youth market, consumers are not hung up about ownership at all – they’re in to discovering, sharing, sending each other playlists, having instant access to new stuff

“We need to monetise the music to respect the artist for the content they’ve created. This is a better model … it rewards the artists whose music is played the most often, which is much better than paying the same to an artist who’s played once as is paid to someone played every single day for 40 years. You don’t have to worry about one-hit wonders that get bought for a week and no-one ever listens to again.

2 Responses to “@ MWC Interview: Rob Lewis, CEO, Omnifone: Freeing Mobile Music”

  1. "OMA2-grade mobile DRM" means actually Playready. Omnifone has announced a deal with Microsoft also at 3GSM to integrate this technology (marketed by MSFT as a "Content Access Technology" and not "DRM") into their product offer. I see this as a way for OMF to bridge the gap between their mobile solution & the PC environment where they have not announced anything up to now, probably for financial reasons (the cost to develop a DRM agent that can run inside a PC player & that offers the same use cases as OMA DRM 2.0 is high).