Feeds

Profit margins sway the mobile hit parade

Pay to play

Build a business case: developing custom apps

Mobile operators have been crowned as the future kingmakers of digital music so many times, the coronet must be getting pretty greasy by now.

But how do operators choose what goes on the coveted, and extremely limited promotion space on a mobile music site's home screen?

Richard Wheeler, head of music partnerships for Orange, helped shed some light on the subject on Friday at MusicAlly's digital music convention, part of Brighton's Great Escape festival.

When the subject was first raised in a panel discussion, Wheeler, who joined Orange from Sanctuary, agreed that it was truly valuable real estate. Mobile users will only get to see 10, or at most 20 picks because of limited screen size and bandwidth. So to that end, Orange was developing sophisticated recommendation engines based on pinpoint demographics, he said.

A few minutes later, he augmented this with an answer that might be somewhere nearer the truth.

He admitted: "Yes, placement is based on the margin we get from the labels."

In other words, Orange will promote songs on which it stands to make the most money. The other panelists, from mobile operators T-Mobile and O2, looked sheepish. It's as well there weren't any journalists on hand to record the admission.

Well, just one or two.

Orange UK offered us this clarification:

"Orange's standard portal placement and customer recommended content are two entirely separate strategies that currently work well sitting alongside each other. Currently, our content is chosen by an editorial team based on song popularity. However, we are considering choosing featured content based upon margin."

But successive panels on mobile music showed that a cold wave of realism is blowing through the operators, as well as considerable wariness of Apple.

Panel moderator Steve Mayall from MusicAlly noted that operator 3's downloads had remained flat, at around a million month - and 3 is raising its prices saying the business wasn't economical

(3 wasn't there to answer back)

O2's head of music Matt Cockett said the days of operators throwing seven figure sums at individual artists were over. It didn't pay, he said. In one case last year, saturation promotion had actually resulted in the artist's sales declining that month.

The ringtone business is also showing signs of cooling off - with UMG saying revenues were down 20 per cent year on year. However, ringback tones - which is the song you hear when the call recipient is away or busy - have been a bonanza in Asia, but have yet to catch on in Europe - that's potentially a $2bn a year business waiting to happen (ringtone revenues dwarf the amounts raised by online download stores such as Apple and Napster: they grossed $6.6bn last year, as Steve Gordon explained here).

But Rob Lewis, whose Omnifone venture has unflinchingly addressed many of the problems of mobile music, saw more reason for optimism.

Nokia's market research showed that the desire to have consumer music on the one device - the phone - wasn't being fulfiled. Only 10 to 15 per cent of users played music on their phones, and those users acquired an average of six tracks a year.

"Nine out of 10 people haven't joined the digital revolution yet," he said. "The iPod is a bit of a pain: you need a PC and a credit card, and you need wires to sync. It's not something your grandmother can use."

He said the operators were in "the Last Chance Saloon". The real market was a billion mobiles, not "10 million iPods".

Lewis' MusicStation service promises a "celestial radio" of any music, on any device, anywhere - for £1.99 a month. He's gradually fleshing out the promise: 30 carriers have been signed up, and it reaches 70 per cent of the mobile handset market. It just has to be dead simple to use, he said. "Simplicity is what can beat an iPod".

We'll get a chance to see how the market responds to this proposition later this year, when MusicStation rolls out.

The iPhone may have been labelled "Newton 2.0" outside the US, where it's viewed as attractive rather than essential, but Lewis said the operators were far more terrified of the iPhone than they let on.

"Manufacturers are now very worried about the high-end consumer leaving the Samsung and the Motorolas." ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Canadian ISP Shaw falls over with 'routing' sickness
How sure are you of cloud computing now?
UK fuzz want PINCODES on ALL mobile phones
Met Police calls for mandatory passwords on all new mobes
Don't call it throttling: Ericsson 'priority' tech gives users their own slice of spectrum
Actually it's a nifty trick - at least you'll pay for what you get
Three floats Jolla in Hong Kong: Says Sailfish is '3rd option'
Network throws hat into ring with Linux-powered handsets
Fifteen zero days found in hacker router comp romp
Four routers rooted in SOHOpelessly Broken challenge
New Sprint CEO says he will lower axe on staff – but prices come first
'Very disruptive' new rates to be revealed next week
PwC says US biz lagging in Internet of Things
Grass is greener in Asia, say the sensors
Ofcom sees RISE OF THE MACHINE-to-machine cell comms
Study spots 9% growth in IoT m2m mobile data connections
O2 vs Vodafone: Mobe firms grab for GCHQ, gov.uk security badge
No, the spooks love US best, say rival firms
Ancient pager tech SMS: It works, it's fab, but wow, get a load of that incoming SPAM
Networks' main issue: they don't know how it works, says expert
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.