Mobile-phone downloads are ready to transform the industry and forever change how we consume music and other multimedia content. Just last month, significant milestones in the world of mobile music were achieved: 1) The shockingly high data fees associated with downloading full-length mobile-music tracks were eliminated, and 2) For the first time ever, record labels launched full-track music downloads for mobile phones sold off-deck. So why is our industry now ready to leap into revenue-generating off-deck downloads?
The Answer: Mobile transaction networks are using an innovative wholesale data model that allows the carriers to resell data bandwidth to a trusted intermediary, thus enabling content providers, record labels and artists to market and sell music directly to consumers at a low price. This eliminates any ambiguity for customers regarding data charges, which can be as much as five times the price of the song for mobile content downloads.
In the U.S. and Europe, incremental data charges generally cost $10-$20 per megabyte. Oftentimes, these charges are not known until the next phone bill arrives. The bill shock associated with these charges has been a great obstacle to mobile downloads. Today, content providers find themselves inviting consumers to "Download this track for only $2 plus your normal data plan charge, which may range from nothing to $20!" Understandably, this confuses pricing and discourages mobile users from proceeding with downloads.
Because the wholesale data model swaps who pays for the data charge from the consumer to the content provider, it brings about three great advantages: 1) Content providers are sold the data at low wholesale rates that can be bundled into the cost of a song, 2) Pricing is now totally transparent to the consumer, 3) No matter what data plan the customer is using, the content provider can publish and guarantee the full cost of the content. That means no more surprises on the bill and a viable business model.
Until now, services like Napster and iTunes have dominated the online music download business, which is expected to swell tenfold to $4.9 billion by 2011, according to Forrester Research. The industry has predominantly involved downloading a song to a computer, and then uploading it to a digital music player.
Downloading directly to mobile phones unties music from computer terminals so consumers can buy music anywhere. Moreover, since more people have mobile phones than MP3 players, and because mobile phone technology is becoming sophisticated enough to allow the storage of thousands of full-length tracks, the future of mobile entertainment consumption is shifting away from the computer terminal.
While music has been the first content type to be downloaded off-deck, it's just the beginning. This model will work for all other rich content including live music, movie trailers and streaming TV.
Consumers are not the only ones who stand to gain handsomely by this revolutionary off-deck wholesale data service model. Content providers, like record labels, can now advertise songs directly to consumers on buses, billboards or wherever they like. The record labels are able to interact directly with customers, build lasting relationships and offer a greater variety of content in a more targeted and more cost-effective fashion.
- Content providers gain a cost-effective, ethical route to selling rich media off-deck.
- Carriers gain a brand new source of off-deck revenue, without threatening any existing revenues.
- Consumers enjoy a whole new world of mobile content, without the costly data fees.
This exciting news was unveiled last month in the U.K., the world's largest off-deck market, when two record labels, Ministry of Sound and V2, launched mobile Internet sites offering the new experience to their customers. Designed by mobile music specialists New-Visions, these sites give users access to an exclusive range of exciting content from bands like Lethal Bizzle and Stereophonics.
In a mobile content industry increasingly driven by off-deck creativity and marketing, wholesale data represents the key to opening up the next phase in the market's development. Rich media, especially music downloads, are the future for the mobile entertainment industry. And wholesale data services are setting the standard for how consumers will access and listen to music in the future.
Jay Emmet is president of mBlox, the world's largest mobile transaction network and one of this year's Fierce 15 winners.