Music to Mobile marketing and Spotify

Mobile usage a rare highlight in music biz
Mon Sep 28, 2009

By Antony Bruno
The mobile music landscape is very much a study in good news, bad news.
The bad news is that mobile music has failed to live up to the expectations that the early success of ringtones had inspired. Combined ringtone and ringback tone sales have fallen almost 23 percent so far this year, according to Nielsen RingScan. And Forrester Research analyst Sonal Gandhi estimates that only one-third of mobile subscribers with music-capable phones use their devices to listen to music.
"That's not very big in the grand scheme of things, considering how long we've had MP3-capable phones," she says. "Compare that to iPhones users. Almost 60 percent of them are listening to music on their phones, and it's only been around two years."
But it's not all gloom and doom. The mobile content business is undergoing a dramatic sea change, evidenced by the introduction of downloadable applications for such devices as the iPhone, BlackBerry and Android-powered phones. This new app-based distribution model allows developers and service providers to create mobile-specific services and sell them directly to users without interference from mobile operators, which historically have restricted the flow of new services available on their networks.
This, combined with more sophisticated handsets and smart phones, has already had a positive effect on mobile music consumption. According to Gandhi, mobile music usage -- while still low overall -- doubled during the past year. She credits music apps like Pandora and Slacker as driving the bulk of that increase.
And there are more music apps coming. RealNetworks just released an iPhone version of its Rhapsody subscription music service, marking the first time U.S. music fans can access on-demand streaming music from their mobile phones. Spotify just launched a similar app here in Europe as well.
Both require monthly subscription plans, which will certainly affect adoption. But it's only a matter of time before Vodafone or Orange decide to bundle a monthly music subscription into the cost of an unlimited mobile data plan to retain existing customers and attract new ones.
Carriers have avoided doing so because of network bandwidth capacity and cost concerns. But carrier sources say network improvements have addressed those concerns, adding that the remaining hurdle is getting labels to agree to a licensing rate low enough to offer a reasonable price to subscribers.
"Mobile companies have to be really serious about using music as a differentiator," Gandhi says. "They're the best people to do music subscription because they have a billing relationship. They can get people to pay a certain amount monthly without even thinking about it, (and) that can be used as a way to drive data adoption as well."
Of course, this could just be the beginning of yet another round of hype, something the mobile industry is no stranger to. How it responds to the early success of music apps could determine whether the industry will repeat its earlier disappointment with ringtones or finally succeed in developing a larger, more lucrative mobile music market.
"Ringtones and ringback tones have certainly been a really big business and caused artists and the music industry to really pay attention to mobile," says Rob Hyatt, director of premium content at AT&T. "The real challenge for us collectively is -- what's next?"


The Pros:
A fixed fee: If you’re a big music fan, chances are you buy a lot of music. With Spotify I make a saving. I used to spend more than £9.99 a month on a combination of CDs of my favourite bands and iTunes downloads of everything else. Now I know I’ll spend no more than the cost of my subscription every month.
Removing the Piracy temptation: Although I’ve never been a prolific illegal downloader, I know people who are. One such person sent me an SMS three weeks ago announcing that he was ditching BitTorrent in favour of Spotify. He’s not alone; Spotify claims that 80% of users have abandoned illegal filesharing. The choice of music available with no effort at all makes BitTorrent’s risk of prosecution and virus infection seem like a chore.
Saving space: Before I installed the Spotify mobile app, my 16GB iPhone had just 50MB of free space left thanks to all the music squeezed onto it. Now I’ve deleted most of that music as I can just get it from Spotify whenever I choose. Then there’s physical space – all those CDs I have taking up shelf space can be safely packed away, I barely touch them these days anyway.
Trying new things: Not having to buy everything individually means I’ve become a lot more bold about trying new things and exploring music I’ve never got around to in the past. If I read a glowing review of an obscure new band I can be listening to the album on the go within minutes. Meanwhile I have a newly intimate knowledge of the back catalogue of bands like XTC and Public Enemy.
The Cons:
What? You don’t have it?!: While Spotify’s library is now pretty comprehensive when it comes to the past 50 years of popular music, there are still holes. Want to listen to De La Soul’s classic 1989 album Three Feet High And Rising? For the time being you’re stuck. Big names like The Beatles are also missing. You can’t quite throw away your MP3s and CDs yet.
That syncing feeling: Away from home and get the urge to listen to something? Get ready for your phone to become a hand warmer. Yes, streaming music makes your handset incredibly warm and runs down the battery in no time. To get around this, you can sync music to your phone as offline playlists in advance via wifi. This works brilliantly but it does mean you can’t be quite as spontaneous as you might like to be.
Organisation: While Spotify is a great way to listen to music, once you start building up a substantial collection of playlists (all my favourite albums have a playlist each, for example) you start you wish there was a way of organising them. Playlist folders would be a good start but how about a ‘virtual music collection’? You could browse albums and artists that you’re a fan of as if you were browsing a physical collection. Think of iTunes coverflow for Spotify. For now though, you have an ugly and unwieldy bunch of playlists to scroll through.
The little things: As much as “The Spotify Life” may suit you, there is bound to be something that bugs you. For me it’s the lack of Last.fm scrobbling for music you listen to on the mobile app. The desktop app has Last.fm integration and as someone who is obsessive about his scrobbling it would be nice to see that extended to the mobile experience.