Saturday, January 2, 2010

Can I have your number? Can I have it? Can I have it?


Hey readers-
Happy New Year!!! Hope everyone had as good of a time as I did. I must say I was very pleased with my Steak and Shrimp Tepanyaki New Years dinner.

But straight to the chase-- this post I'm going to be discussing the implications of the Cellphone Industry on music. 2009 was a particularly big year for the smart phone industry-- which can only mean good things for the music industry as well.

The mobile industry is one of the first to introduce music bundling packages with preexisting service plans. Bundling is one thing youre going to hear me talking about again and again-- but I truly believe that bundling will be an integral part of any comprehensive solution to (re) monetize music in the future.

But before delving into the bundling aspect-- first I would like to substantiate how important the mobile industry has become to music revenues. Just take a look at these next few figures--




































The obvious takeaway is that ringtones, and ringback tones have been a nice cash cow for the industry AND people are interested in listening to music content on their phone-- whether its through streaming or using their mobile device as an mp3 player.

Next I would like to address the potential mobile music subscription bundling has. Whereas ISP's have no real incentive to package web services such as music streaming into their existing model-- the cellphone industry can use such services as real differentiators to leverage specific phone models or service plans.

In the interest of keeping this post short and sweet I will just drop a few quotes to substantiate the claim above-- starting with a major label head--

“Ultimately, we will see all sortsof products come with music –home stereos, cars and potentially televisions. Music can become an important element that enhances the value of consumer electronics devices,providing consumers with a very complete and satisfying experience.”

Thomas Hesse, President,Global Digital Business, Sony Music Entertainment

Next two mobile heavy hitters:
("Comes With Music":When consumers buy aNokia Comes With Music phone, they gain
unlimited music access for a year and can download songs at no additional charge.)

“We believe that Comes With Music will transform the way people enjoy music. With unlimited music access for a year, fans can enjoy their favourite artists or delve into new genres without having to worry about individual track or album purchases.”

Tero Ojanpera, Head of Entertainment, Nokia

("PLAY": PLAY provides unlimited access to 2.2 million tracks for the company’s mobile and broadband customers that sign up to the service, without additional charge while their subscription is ongoing.)

“ The mobile and broadband markets in Denmark are highly mature, hence focus is more on
customer retention than customer acquisition.TDC PLAY is vital for us in our aim to keep our customers and stabilise our turnover.”

Eva Berneke, Senior ExecutiveVice President & Chief Strategy Officer, TDC

Clearly the writings on the wall are pretty clear-- introducing music into non traditional venues is where the future of music lies. Bundling happens to hold a very customer friendly incentive-- and cellphones are, so far, the easiest medium to execute this model through.

“ We have to help fans find music wherever they are at the moment they want it. If we can do that we will find ways to monetise it.”

Douglas Merrill, President, Digital Business, EMI Music

“ A big album worldwide will sell about seven million units but many more people will enjoy
the album. This is about lighting up all these other consumers.”

Rob Wells, Senior VicePresident, Digital, Universal Music Group International




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