Mobile Music on the Rise: 40-45% of Digital Revenue for UMG

January is MIDEM time (even though, sadly, I cannot go this year), which means that music dominates the news. In an interview, the EVP of Universal's eLabs, Rio Caraeff on the revenues of Universal Music Group that:

"about 40 to 45% of our overall digital business is coming from mobile channels like Verizon and AT&T. [...] On much of our frontline pop or R&B or urban releases [...] we're seeing mobile comprising 20-45% of the [overall] revenue for those artists."

Wow! Universal's digital sales have been growing by 33% during the first 3 quarters of 2008, and they seem determined to fully converge "online", "mobile", etc into one:

"The consumer doesn't want a mobile-only experience - they want an all-digital multi-platform experience. They want to consume their music on their mobile handset [and] on PC and other online platforms. Partners like Verizon and AT&T wanted to have multi-platform online experiences as well. [...] Now at Universal, we don't have a mobile business. We don't have an online business. We just have one multi-platform digital business."

Amen to that! And how right he is. Universal also adapted pricing, so that a song costs the same no matter on which digital platform you buy it. And, apparently, mobile storefronts play a role, specifically Amazon's MP3 storefront, which is pre-loaded on the G1, the first Android phone. So it's app stores (or markets) all over this year, huh?

This shows that the majors learned from the pain of recent years and now get a grasp on the digital world. Good stuff that!

Comes with Music Comes to Mama

Nokia's "Comes With Music" service (unlimited downloads of 4m+ music tracks), which you get when you buy a phone, had been announced with much fanfare but it went a bit quiet after that. Now "early results" from the service show that it is mothers appear to be amongst the leading adopters, according to a Nokia executive. Unfortunately, that seems to be amongst the few bits of information they would let out into the public, the only other one being fairly obvious: recommendation is a driver (did they consult Amazon?) and chart coverage matters (Popularity matters? What?).

It would be wonderful would Nokia actually release a showcase of what it achieved with the service. I appreciate that they will want to wait since the service has gone live in the UK first and that only recently but I do hope that they will enlighten us... 

Juniper to the Rescue...

We can depend on the researchers from Juniper after all (or maybe they simply felt bad after reading my post on their last report). Whichever the reason, apparently the mobile content industry could be worth a hefty $167bn (!) if - yes, if - the operators would resolve to allowing a workable commercial environment, namely by limiting themselves to lower revenue shares. Whatever the caveats (which are, as usual, hidden in the expensive main report) this number is topping even the loftiest predictions to date; right on in times of the doom and gloom. The key apparently lies in whether operators would act as dumb pipes (no richness for anyone) or a smart pipe (lots of play money for all players on the value chain). In their own words:

"If MNOs are to benefit financially, they need to move away from their Dumb Pipe roots to the Smart Pipe model, though they will clash with the content providers which already dominate the Smart Pipe. A compromise needs to be found."

A smart pipe is understood as one where operators would offer flexible, application-centric value configurations, allowing lean, efficient content offerings from third parties. A dumb pipe is one where content (and value) would merely rush through the pipe without any value being added by the operator. The prevailing model in the mobile games world, namely the on-portal approach where operators implement comprehensive vertically-integrated models ("walled gardens") is suggested to be somewhat doomed as content providers would gain bargaining power (presumably through consolidation of the supply side plus entry of meatier traditional media players in music, video and TV).

This is all pretty speculative though, and without some background it is quite frankly impossible to analyse the numbers some more. Mobile content appears to include (as per their report from March) games, music, video, TV, social networking, adult content, gambling and so on, and so forth. However, the exact calculatory basis is again hidden in the depths of the report, so I don't know (do they e.g. take the gross gambling revenue or on;y the rake, which is only a few percentage points of the former). Anyhow, due to these foggy conditions, commentators seem to either merely re-print the PR blurb or mock it (Stuart Dredge thinks that "only gas could do that kind of money"), which is a shame really; just think what you could with this much money...

T-Mobile shuts the door on Nokia's Ovi... Or did it?

Funny little press reports today tell us that T-Mobile "ditched" Nokia handsets that are capable of supporting the Finnish giant's Ovi (Finnish for door) multimedia portal. The German originator of these news is slightly more cautious: they also report that T-Mobile denied this and merely point out that T-Mobile has less Nokia phones on offer than a week ago and has - quite noteworthy indeed - removed all those that were "Ovi-enabled".

The background is of course Nokia's move into the multimedia service area (on which I first wrote about here). Nokia scored some early successes, namely with Telefonica (see here) and Vodafone (see here) but the threat to operator-driven content offerings was clear from the start. Whilst Telefonica and Vodafone were quite content on having the Ovi portal to music, video and games offered from Nokia's platform, on their desktop alongside their own offering, T-Mobile allegedly sees this as a threat to its own plans. It is, hence, yet another iteration of the fight of carriers for their ground in the media sector.

T-Mobile might feel strong in the media space due to its iPhone monopoly in Germany but even if (and I suspect that that is not the case), it would be a somewhat desperate attempt: if such drastic moves as locking out the market leader's handsets are required to keep customers on its own content offerings, is it then not a clear sign that such offerings might not actually be cutting it? In particular when the competitor is an OEM that in itself does not really enjoy a particular flair of creativity and buoyancy in media terms...

I would suggest that Nokia is (only?) a noteworthy competitor because of its market share in the OEM market, and not because it is such a good media company. Constraints with a view to placement on the phone's "desktop" as well as walled gardens and consumer fear for super-high data charges (see an absurd example here) drive people to what is there, not what is best. This is not even disrespectful to the fine folks at Nokia; it merely is to demonstrate that a lot of players are not even there yet, so that it is too early to say who is best. The desperate moves of the carriers as well as historical performance on the content side suggests, however, that carriers may not be the best suited ones. Given that content is only a fraction of their data revenues, this may not actually be a bad thing: could it not be pointing them to do what they're really good at, i.e. operating a network. If you want to call it a pipe, fine, but just make it a very, very smart pipe, and everyone (most importantly your customers) will love you!

Microsoft buys Musiwave

It did not take too long to bring down the value of mobile music spearheads Musiwave from $130m to $50m. The former was the price Openwave paid for the French company in 2005, the latter is what Microsoft now splashed out to buy it from Openwave ($46m in cash and $4m in assumption of debt). And at this price, it looks like a rather good buy for the world's largest software maker.

Microsoft has acquired what was an early leader in mobile music. Musiwave is a giant in mobile distribution of music content - everything from ringtones, ringbacks and full-track downloads to music recognition, etc. Whilst Microsoft will have seized access to a trusted carrier-grade database and provisioning environment as well as Musiwave's extensive relationships with all players on the mobile music circuit - labels, carriers and device manufacturers. Now it will have to show that it can marry it to its own music-centered services, in particular around its Zunes device and service.

All in all, Microsoft seems to be a much more natural home to Musiwave than Openwave would seem to have been. Good luck to the tall guys in Musiwave!

Emotional attachment to mobile content...

Yay, another study is out! This time, we are being told that users have "strong attachment to the content on their devices, which includes address books, ringtones, text, pictures, music, games, and other applications". Ah, it includes the address book and pictures - presumably those primarily taken themselves with the phone's camera. Astonishingly, users reported that losing their phone is far more painful than [...] breaking up with a boyfriend or girlfriend. Hello? Did they only ask specialists in speed-dating? Over half said that losing their phone would cause their social life to suffer. Well, yes, your evenings can be pretty lonely if you don't have any number of any friend anymore...

66% of the users re-enter new addresses manually into new devices. Have they never heard of the software suites delivered with every phone these days that make this a piece of cake?

There is of course some truth in this, such as the grown significance of mobile phones and mobile-created/stored content, and, yes, because people tend not to use the tools readily available, it can be a pain in the neck when you need to swap the beauties. However, much of the findings appear to be slightly distorted by the above mentioned contacts and pictures. 70% of the users find it extremely or very important to back their contacts up. Doh! Why don't they? This already goes down to 30% for photos - and these are arguably as personal. No word on ringtones and games. Whilst I can see people sweating over having lost 450 telephone numbers including the one of the rich auntie, I struggle to see a user weeping because his Tetris highscore is no longer available on his shiny new phone (although then, they just might). This is in spite of the cost of mobile content, which can be significant when you add up content purchases over the lifetime of the device.

Who commissioned the study you're asking? A company called FusionOne. And what does FusionOne do you say? Well, in their own words: "mobile applications that help consumers protect and manage the personal content on their mobile phones, including contacts, calendar, photos, music and messages." There you have it.

Nokia opens doors (if you read Finnish, that is)

Nokia launched its new Ovi platform to great fanfare. Ovi is apparently Finnish for "doors", which gives a hint on what they intend to do: lots of door-opening to "delivering experiences and services", which now is their business according to CEO Kallasvuo.

There is not too much on tangible details so far. Ovi is supposed to be the door (geddit?) to a bundle of services, namely their new music service, their revived N-Gage gaming brand (now a service and not a device anymore; good New York Times article here) and Nokia Maps. Then, it is said, it shall also "the entry point for other Web and mobile services". Which ones? Dunno...

Nokia is of course perfectly positioned to try and unify a content experience on the fragmented mobile space: its massive market share in most markets around the world allow it to push its platform onto a lot of existing devices. As an attempt of unifying the scattered environment, this is probably as good as it will get in the shorter term, so fingers crossed!

R.I.P. Tao Group

Tao Group has apparently perished. According to reports, the group is in administration. Their IP portfolio was apparently sold off to Cross Atlantic Capital Partners, a VC that lists Tao Media Ltd as a portfolio company. No further news though...

This marks the demise of a remarkable company: their Intent platform presented an opportunity to run console-quality 3D games on existing chip sets that would blow you away (at 3GSM 2006, I saw a demo of an FPS on a Motorola V3x chipset that was simply awesome!). Besides whatever internal issues there might have been, their trouble might just have been the chicken-and-egg-thing: developers shied away from developing heavy native 3D games whilst the platform was not installed anywhere. Carriers hesitated to commit for similar reasons and the OEM waited until content was available and carriers in place to distribute it (which was important due to existing data thresholds for games.

My favourite piece of technology of theirs was, however, the BAFTA-winning, fantastic miniMIXA, which you can learn about a little here. The website for the product itself is down as of today but there is a good article here... Some rather cool videos showing samples of the software in real-life action can be seen here and here. They also ran the music for their party at 3GSM 2007 entirely through a miniMIXA-equipped Windows Mobile handheld. Awesome!

Make sure to also visit the blog of Tim Cole, miniMIXA's daddy and a very fine man indeed.

Prince-ly Guitar on Verizon

One I've been waiting for for a long time: an opportunity to post something on one of my all-time heroes (strictly music-wise!) , the man who plays at least 167 instruments, the only one who can walk on 19'' stilettos, the artist with the infallible fashion sense, namely the incredible Prince. We read that Verizon and Prince entered into a collaboration which they claim is an industry-first "direct-to-mobile relationship". Prince will release new single "Guitar" exclusively via Verizon. This leads a promotional campaign up to the new album "Planet Earth" which will be released in July.

Verizon will promote artist, song and - incidentally - its V Cast service via print, TV, radio and cinema. This strikes me as rather traditional really... However, Verizon and the artist have tied up a rather need package featuring nearly every sexy must-have service around these days: V Cast customers can hold their handset up to the TV set to identify and download the song - IF their phone as Song ID, that is. They can also simply go to Verizon's website and download it there. Upon release, the video will also be available on "licensed sites" YouTube, MySpace, Revver and Veoh.

As Prince isn't signed to a label, this will be the main piece of promotion for the album, and that is certainly a rather revolutionary affair, at least one never tried by people who weren't signed because they couldn't find a label (as had happened to the Arctic Monkeys a while ago who, having started off on MySpace, have since grown to become an established acts signed to Domino). This together with a hole bouquet of recent activity of the artist (everything ranging from new website, concerts in Minneapolis [7/7/7] and London [21 Nights, selling 140,000 tickets in 20 minutes] to a new perfume and cosmetics range [not sure if I'll try that one]) suggests a serious assault on the classic set-up of the music industry and the labels' stranglehold onto it. This had been weakened by the arrival of digital media but never broken.

If it pans out? I sincerely hope so - less for revolutionary zeal, more for one of the greatest artists of recent decades. But in any event is this one of the more exciting music promotions of recent times. Well done!

Although, I don't want to hide the bad: the world there is again defined as being North of Mexico and between the Atlantic and Pacific Ocean only... Or are we non-Americans not worthy of some Prince-ly mobile musical delights?