Solving the mobile music malaise

While acknowledging the mobile subscriber population represents "the largest market the entertainment industry has ever had," Warner Music Group EVP of digital strategy and business development Michael Nash argued the current a la carte premium model does not work, pointing to subscription-based services like Nokia's Comes With Music effort as the future of mobile multimedia. Speaking Tuesday at the Mobile Entertainment Live! event, Nash--joined onstage by Nokia's head of major label relations Paul Smith--said the mobile content segment is flatlining, blaming the divide between consumer demands and existing business models. "Digital connectivity is all about accessing data and content," Nash said. "The a la carte model doesn't make sense to consumers. It's a disconnect to have a business model completely disassociated from consumer behaviors."

Needless to say, Smith agreed with Nash's assessment. Last week, Nokia announced its Comes With Music all-you-can-eat subscription service will launch in the U.K. in next month. "There's a real need for new business models," Smith said. "Giving the consumer a choice is really important. The idea of keeping your music is hugely compelling. Consumers don't want to see their music disappear."  

Content bundles are also essential to the growth of mobile music, Nash said. "There's no reason why network operators can't create interesting propositions around the bundle--bundling content and connectivity is a logical equation," he said. "We're at the beginning of the evolution of this space--we need different approaches to the content and connectivity equation." Nash contrasted the Japanese mobile music market with its U.S. counterpart, noting that while sales of mastertones have declined in both regions, Japan enjoys a 34 percent compound annual revenue growth on mobile music, compared to just 5 percent CAGR in the U.S. "Bundling the full track and the mastertone [in Japan] has livened up the proposition," Nash said. "It's a simple element of the equation: We've got to make a relevant product for our consumers."

The U.S. market nevertheless remains a major proposition for Nokia, Smith said. "It's a key market for us," he said, and said a U.S. Comes with Music service is in the planning stages. "We want to be able to secure the right content deals--our mantra is all about localization," Smith said. "We have a dialogue with [U.S.] carriers going on. We'll be there when we're ready to be there."