As a medium, mobile is already extremely important to selling music, not just in the UK but internationally. The single biggest digital music store outside the US is a full track-to-mobile store in Japan, called Label Mobile. It’s encouraging when you see a mobile music retail outlet that is bigger than a fixed-line one.
The future of digital music is definitely on mobile, and the transition to mobile is already happening. More and more people are downloading tracks and listening to music on their handsets.
In the UK, between 15% and 20% of Universal’s digital music business is on mobile. This figure will increase to around 35% next year and to about 50% the year after.
The growth next year will be mainly down to one of our partners – Nokia. We were the first to sign on to Comes With Music, because we believe that these kinds of cross-subsidy deals will earn us significant amounts of money.
The commercial model of course has a potential risk of super usage, but what we have learned from existing usage of subscription services is that there is enough churn for us to cover the music. There has been speculation about the profitability for Nokia, but the people we deal with there are not stupid. There is no way that they would have done this if it didn’t make commercial sense for the company.
Philosophically it’s a really great service. Anyone that I talk to
about Comes With Music thinks it’s amazing.
Unlimited subscription models are
also useful for reducing piracy risk. Why do people pirate music? Price point and bragging rights are two key factors. The best way to combat this behaviour is to give unlimited music free of charge to the consumer, where the industry is paid from the price of something else i.e a device or broadband subscription. Overnight, the person with a hard-drive with 60,000 stolen files on is all of a sudden deeply uncool, as other people have access to everything.
The Omnifone model of a weekly subscription with MusicStation has a market too. Its reach is currently limited because it is only on Vodafone UK, but it is an amazing service and a great platform. It’s also a raging success. The service is more profitable for us than any other full track-to-mobile service in the UK. The back-end technology it has to analyse the usage is very clever. We know exactly who listens to what, when and where.
The price point has to be at a certain level and Omnifone fits that too. It’s low enough to allow pay-as-you-go customers to use the service.
The pay-per-track model still has something left in it, but it is not a sustainable model for mobile. There are too many decisions that consumers have to make when they buy single tracks and the purchasing is too difficult. There is so much more growth in subscriptions than in the a la carte model.
As a record label we sign up artists to produce a body of work, an album, but less and less people are listening to albums as full bodies of work. But we have seen with subscription services that people are more likely to listen to full albums rather than cherry pick tracks, as there is no cost penalty involved.
There is still work to be done on the mobile front. All the operators need to focus more on value-added services. Vodafone and MusicStation is the most exciting thing going on right now. The other operators need to get their act together; they need to be more exciting than just selling single tracks and ringtones.
Rob Wells is senior vice president of Digita at Universal Group International