Music Ally

Live from London, we’re liveblogging our own Mobile Music In The Dock event, for which we’ve gathered expert witnesses, canny prosecution and defence teams, and a raucous (we hope) jury to decide whether mobile music is living up to the industry’s expectations. Read on, and refresh for the latest entries…

18.35: We’re about to get underway, but here’s a rundown of who’s who tonight. The prosecutor is Jeremy Silver QC from Sibelius Software, while the defence counsel is Ralph Simon QC from the Mobile Entertainment Forum.

Expert witnesses include Paul Kenny (Global Head of Music, Vodafone), Tim Grimsditch (Global Product Marketing, Nokia Music), Mark Mulligan (Senior Analyst, Jupiter Research), Scott Cohen (Founder, The Orchard), Paul Lee (Deloitte) and Gary McClarnan (Sparklestreet).

The judge? Our own Paul Brindley. No, he’s not wearing a dusty wig. We did try to persuade him. Read on for the report of what happens, as it happens.

18.40: Jeremy Silver kicks us off with a punchy introduction. Mobile music is letting down consumers, artists aren’t happy with it, and it’s generally not living up to expectations. To paraphrase him. He also has the legal lingo down pat, which may sway the jury either way.

18.43: Ralph Simon with some opening remarks for the defence. He can throw around the legal terms too, naturally. “We will be able to show, with the witnesses we have here this evening, that this whole area of mobile music – and most importantly the promise of what it’s bringing to the economy of music, can certainly be justified. We think we’ve got a pretty persuasive and we hope a conclusive case to prove.”

18.45: First witness is Mark Mulligan from Forrester, speaking for the prosecution. He kicks off by explaining the size of the mobile music market. “It’s a reasonable sized market – around about 900 million Euros in Europe this year. But the majority of that is ringtones. The online downloads market completely out-shines over-the-air [mobile] downloads.”

He also points out that European OTA music sales are completely dwarfed by OTA sales in Japan. Is that showing how much potential there is in Europe for mobile music? Not so, he says. “Just because something is popular in Japan, doesn’t mean it will be popular in Europe. In fact, the opposite is often the case.”

He accepts that Comes With Music and PlayNow Plus have “a huge amount of potential, but they’re not about to change the mobile music market anytime soon”. They’ll take a while to work because of handset replacement cycles, because people need to grasp the concepts, and because people who market them can’t – for various reasons – market them to their full potential.

Mulligan thinks the differentiation between mobile and online music is going to disappear. He points to what Apple is doing with iPhone – you buy from the iTunes online store with a credit card. Also Nokia Comes With Music, where you sideload tunes on. “The big forces in online music are trying to make mobile music as a separate entity disappear.”

18.50: Ralph Simon cross-examines Mark, and picks up on the blurring of the boundaries between mobile and online music. He admits that more and more people are experiencing music on a mobile device – “if we’re talking about playing music on a mobile phone, that market is opening up. If we’re talking about people downloading music over the air, that market is not opening up.”

In other words, Simons’ point is that people are keener and keener on mobile music – listening to it on a phone – whereas Mulligan is saying they’re not interested in downloading it over the air. They’re essentially not disagreeing with each other, when you think about it.

18.55: Simons calls his first witness, Paul Lee from Deloitte. His evidence is going to focus on the history of mobile music, starting in – cor – 2003. The days when you downloaded music at a rate of 40 Kbit/s, paid £1.50 per track, and played it on a phone that was poorly equipped to play music.

He fast forwards to 2008, where we have speeds of up to 7.2Mbit/s (hmm), the costs for mobile data are much lower – “it’s difficult to spend £10 per month” – and there are more specialised music-playing handsets from the likes of Nokia and Sony Ericsson.

He continues. “The environment has changed and the nature of the mobile phone has changed quite radically. It’s not just mobile networks, but also Wi-Fi networks, office networks, other phones can link to other phones, and also Wi-Fi hotspots. This is what mobile networks are becoming.”

So these new networks are making it easier to get music onto phones, is essentially his point. He also points out that these networks can be used for car navigation systems, car radios and high-end radios. “A mobile phone is not just mobile technology, and mobile technology does not just go into what we know as a phone.”

He brings up a slide saying moble music offers benefits to all players. Artists get new routes to market, fans get new ways to access music, music companies get new routes to market and marketing channels, and the mobile operators get a way to stimulate data usage and customer loyalty. And the handset makers get ways to get people to upgrade their handsets (at a time when consumers are starting to think about NOT doing this thanks to the credit crunch).

19.00: Silver cross-examines, asking what time of evolution we’re at in the history of mobile music. “Probably medieval,” says Lee. “The Dark Ages of mobile music?” fires back Silver, quick as a flash. And gets a laugh.

He asks Lee if he uses any mobile music services out there at the moment, and Lee says he uses Vodafone’s music service on a Sony Ericsson phone. How is it? “In this part of London, the networks are very good, and I can see what can be delivered with good networks,” he says, before admitting he has very little music on his phone – “probably 20 or 30 tracks”.

Now Silver asks about one of Lee’s reports, talking about the difficulty of gift-wrapping an MP3 track. What did he mean by that? “When you look at mobile music, one of the big advantages is ease of access. What consumers value as well as tangibility is ease of use, one of the reasons why iPod has worked so well,” he replies. “The potential of mobile music is to access music in as easy a way as possible. It was excruciating five years ago, whereas now, the experience can be a lot faster.”

19.03: Silver again, asking about iPhone, and pointing out that iPhone users can only download tracks over Wi-Fi, not over the 3G network. “That’s not a mobile music service,” he accuses. Lee fires back: “Does that matter? You can’t tell as a consumer what network you’re using,” he says.

19.05: Next witness for the prosecution is Scott Cohen from The Orchard. What’s his sense of the commitment of the mobile operators to music? “To be fair, I see a total lack of commitment from the mobile operators themselves, and that’s self-evident when we see the consumer takeup,” he says. “When you go into Carphone Warehouse and they try and sell you a new phone, they say here’s your voice plan, your data package, your number of texts… has anyone ever said here’s your music service that comes with it? I’ve never heard that…”

Oh, and: “Ask those companies how many staff members they have working on music. I think you’ll find it’s a very small number compared to anything else.” Are they missing a trick then? “There’s a huge lost opportunity. We all see a potential of the future, but when we’re looking in the present we don’t see the offering being that great.”

He thinks operators aren’t even doing basic stuff like selling music to their customers and monitoring their usage to find out more about them, and sell them other content and give them a better experience. “Instead, it’s just like ‘buy a track’.”

Has he tried to engage with the operators to make that happen? “We have these conversations weekly. Whether they do anything about it is a whole other story. The answer is they don’t. They don’t understand the power of what music could mean to them, and what it means ultimately to their consumers.”

What about interoperability? Consumers have big collections of MP3 files, so why don’t operators support it? “The music industry finally got a clue, they’re offering their catalogues in MP3, so now we’re stuck with the mobile operators who aren’t. I can get a track from Amazon or 7digital as an MP3, but through O2 I can’t.”

Are artists frustrated with mobile music? “Artists and labels are absolutely frustrated. Everybody seems to see the opportunity there except the mobile operators. We’ve been waiting ten years for this to explode and it still hasn’t happened. So you get people like Nokia driving the industry, rather than the mobile operators.”

19.11: Ralph Simon cross-examines. How much does The Orchard make available as mobile downloads? “We provide everything from ringtones, and full-track downloads to all the operators and the aggregators that supply the operators,” he says. “It’s us pushing, pushing, pushing, driving at this. Whereas the online stores get it. We’re in weekly marketing meetings with everyone from iTunes and Napster and so on. But when you get to the mobile operators, they just say ‘we’re focused on the Top 10…”

He also points out that most operators don’t run their own mobile music stores – “they’re outsourced and just skinned with their own name”.

He also thinks there’s a huge amount of confusion when operators sell these music services. “In terms of how they’re selling these mobile services, they don’t get to the point. They don’t say ‘you give us x and this is what you get.” So Simon asks why for the operators, music is the biggest category after voice and text?

“I wouldn’t say that’s music, I’d say it’s tones. It’s a derivative of the music industry. People wouldn’t say ‘I listen to tones’, they’d say ‘I listen to music’.” I have to say, this cross-examination isn’t exactly tearing holes in Scott’s testimony, it’s rather giving him the chance to make more criticisms. And pretty well-aimed ones at that.

“What they’re promising the industry and the forecasters is quite enormous, but what they’re promising the customer… well, they’re not really promising anything, because the customer isn’t aware.”

19.18: Now it’s time for Tim Grimsditch from Nokia, as a defence witness. Is there a strong enough interest in music to allow Nokia to invest $100 million in the Comes With Music platform? “Yes, there is a lot of evidence,” he replies.

“Consumers have been leading this industry by the nose for ten years now. What we’re seeing from Nokia’s point of view is that consumer uptake of music on mobile is not only healthy, but it’s growing.” He says 30% of people in the UK use music on their mobile devices, 25% of Brazilians, 40% of the “richest half of Mexico”.

He thinks mobile music is in a similar place to online music ten years ago – healthy usage, devices falling into place, but that “we’ve yet to really see the catalyst services.” He says iTunes filled that role for online music – “we’re at a very similar moment for mobile music as well.”

How does he define mobile music? “I’m not sure I’m that interested in drawing a distinction between mobile music and fixed-line music. If you have a Wi-Fi network running to a laptop and a Wi-Fi network running to a Nokia device, what’s the difference?”

Where’s the market heading? He says Vodafone is going to make “some interesting announcements in the coming months” – intriguing. And he says that thing about Comes With Music potentially delivering huge revenues to the music industry even if it’s just taken up by a small percentage of mobile users.

“It’s not about the high-end early adopter devices, it’s about the mainstream consumer devices, which is why we’re leading Comes With Music with the 5310,” he says. “It’s a fairly basic device, but it’s the best-selling music phone in the world. And if we can offer it for £130, we’re competing directly with Apple’s products, except you get a year’s worth of music included.”

He says Nokia is already looking at “next-step” services, with more than 500 people working on music within Nokia. 500! He also says the Comes With Music campaign will evolve as time goes on, to get the word out and educate consumers. “People would rather spend a lot of money on a device than a lot of money on music, if you look at what’s happening on the high street where people pay £300 for an iPod and nothing for the music on that,” he says.

19.27: Silver to cross-examine. 30% of people in the UK are using music on their mobile devices, right, so where does that music come from? “Probably sideloaded, from CDs or peer-to-peer networks,” replies Grimsditch. Why wouldn’t they just carry on doing that? “You could say the same thing for the fixed-line web. People rip CDs and get music from peer-to-peer networks and play it on their CDs. That doesn’t prove there isn’t a market for downloadable music.”

How much of Nokia’s marketing will be spent on educating consumers, and how much will be spent on raising their expectations? “There will be a peak of interest from some fairly creative ads, the idea is then to drive people online, and get into the core of the site which offers a detailed FAQ, and a 90-second video explaining exactly how it works.”

Last question. What about artists? What’s Nokia’s engagement with the artist community at the moment? “When we were commercially setting up the service, we talked to record labels because they have the music rights, and we realised early in the process that we weren’t including artists and managers enough,” he says. Nokia has reached out to the MMF [Music Managers' Forum], and is speaking at their meeting this week. But he accepts Nokia needs to do more in this area.

19.34: Up next for the prosecution is Gary MacClarnon, who’s a manager. Good timing, that! What’s his view? “Every proposition we’ve had is promising a sprint and actually it’s a hurdle race,” he says. As an example he talks about Bluejamming – promoting stuff to fans at gigs through Bluetooth, except most fans didn’t know how to turn it on.

“We only get approached in these bigger aggregate opportunities after the record labels,” he says. “I can talk on behalf of a couple of the most senior managers in the country, and they have had a pretty poor experience dealing with operators so far.”

What about artist remuneration from mobile music? He says managers/artists weren’t consulted on many mobile deals, and they’re getting paid less than online. “Even managers who had negotiated consultation in their deals weren’t consulted,” he says.

What would he like to see happen? He’d like to see Twitter used where tracks can be bought with simultaneous lockers including video, other content, games and other content. I’m sure this is what he said, although it doesn’t really make sense written down. Twitter, though, definitely. And stuff.

“We’ve resigned ourselves to the mobile being a tool, an access point. And the hub that we’re generating for our artists relies on that access point becoming more and more reliable,” he says, on general strategy. “Mobile music is in this revolving door at the beginning of the universe.”

19.39: Simon cross-examines. Do Gary’s artists have mobile elements in their websites? Some do. “We tried ringtones many many years ago, and what we found was the ringtone providers didn’t actually support the master-owner – the recording side – when it got onto truetones and beyond, they were re-recording and not paying us. So we decided it wasn’t important enough.”

He gives the recent example of an artist who was the “most-clicked” artist online in the UK, but fans weren’t interested in buying mobile music direct from that artist. “They were getting it elsewhere and sharing it,” he says. “They’re using their phones a lot of the time to communicate, and sometimes with music, but it isn’t the key propagator.”

He says that many artists are now providing up to 500 different assets around promotional campaigns, including backstage footage and other content. But the main activity is through websites, and the core interaction is coming through games. Not mobile.

“We’ve always believed it’s not about the music file, it’s about the relationship. The music file has to be accessible and easy, but it’s not accessible or easy through mobile still.”

19.45: Still with me? The last prosecution witness is Paul Kenny from Vodafone. As a big operator, what is their biggest content product across Vodafone, asks Simon. “Amazingly Ralph, that would be music,” he replies. “You said music, did you?” asks Simon, playing to the crowd.

“We’ve launched the Omnifone service n the UK, Australia, New Zealand and South Africa,” he says. “And the BlackBerry Storm is flying off the shelves, and it integrates directly with the Vodafone music store, with an application to browse tracks and buy them directly. So easy to use, we’ve seen this week that more tracks have been downloaded from the STorm handset than any of our existing handsets. And that’s after just a week.”

Wonder what Omnifone makes of that…

“The level of music consumption on mobile is all about the user experience,” he continues. This year Vodafone has seen the level of music consumption on handsets increase proportionately as it embeds more clients in handsets and improves the user experience.

“We think the Storm is a great example of integrating the music experience with the handset, and we’d like to do that on a lot more handsets as well.”

19.50: Silver to cross-examine. Kenny looks nervous. Vodafone does both download and subscription services. Why? “People don’t always want the same thing…”

Is that experimenting though – is Vodafone veering either way? “I think there’s room in the market for both. They’re both successful.” Is one more successful than the other though? “It depends how you define successful.” He’s not telling.

Another question. How many people in Vodafone work on music? “I don’t think we have 500, but we have a lot of people working on music,” he says, although that includes platform development, terminal development and testing, marketing folk and so on.

Onto the subscription service – MusicStation – Silver quotes from the terms and conditions, with its own excessive usage clause. So it’s not unlimited? “Well, it is unlimited,” he replies. “In my opinion, we have yet to go to anybody and terminate their use of the service.”

Silver ends by clutching a Vodafone handset, on which the MusicStation app can only be found in the Applications folder, not the Music folder. Why? Judge Brindley leaps into the crowd and picks out Tim Hadley from Omnifone, who explains that’s probably because it’s been downloaded over the air, rather than pre-installed.

“We’re working to resolve those discrepancies around customers not being able to find their music, and we’re working with terminal manufacturers to resolve those issues,” he says, citing the BlackBerry Storm again as an example of how this should work.

19.57: Time for Q&As now. With the ringtone market flat, why hasn’t there been any effort to evolve the ringtone into something that can sustain consumers’ interest? Cohen replies, saying there is no way, apart from ringback tones. What about bundling.

Mulligan says it’s not worth most small labels doing ringtones, because it’s so focused on the hits. He also says the transition from polyphonic ringtones to truetones killed the ringtone industry, because there wasn’t much money for the likes of Jamba once they’d struck deals. So they all focused on doing other stuff – their own content, games and so on.

Another question: will technology companies become new music companies and invest in artists? Nokia’s Grimsditch replies. “We’re still trying to work out the retail and the service end, so we’re looking to record labels to pony up and invest in new artists, and it’s going to stay that way for a while. We’re certainly not recouping our investment as a mobile music industry enough to start investing in artists, and also record labels are doing a pretty good job. We’d be stupid to try and get into the A&R business.”

Will streaming music be big on phones, or will it remain download-focused? Kenny responds, saying that YouTube has been popular for Vodafone’s high-end 3G customers, and says Vodafone’s Radio DJ streaming music app that launched in 2004 was an early example of streaming.

Another question – how can radio work with mobile music offerings? Grimsditch again: “We recognise that radio is really important, when we started putting FM players in devices, people started using them a lot more than we thought they would.” Some more advanced devices now offer internet radio – albeit it works better over Wi-Fi than 3G – and Nokia is also putting a podcasting client into some devices now.

20.10. Time for the summing up. Silver first for the prosecution – consumers want truly unlimited services that provide files that will play on other players, and artists want to get paid. And “we want to be marketed to like grown-ups, not like fools to be deceived by the small print”. If we get all of that, mobile music may deliver on its promises. “At the moment, promising more than it delivers? I think you can only agree with me, we’re going to have to find mobile music guilty.”

Now Simon for the defence. “If we listen to what an important operator like Vodafone with their nearly 300 million subscribers, and listening to Nokia talking about what is coming, and hearing what Vodafone said about this tiny window of experience we’ve had with the new BlackBerry Storm… it’s not a question of whether the industry is delivering what it’s promising, but…” He goes into a complicated birth metaphor at this point. I’ll spare you.

“Everything is being done to make the user experience and the very ease of getting this user experience something that works for the consumer. We might be at an early stage, but I think we’ve shown this evening conclusively that there’s a lot more promise that is actually being delivered than is thought.”

20.14: And now the vote. Black cards for guilty, white cards for not guilty. And the result is…

Er…

The combined forces of Music Ally are counting, and coming up with different numbers, close enough for a margin of error.

“I’m gonna declare it a draw!” says Judge Brindley to a round of applause. And there you have it.

Tags: jupiter research, mobile entertainment forum, mobile music, music ally, nokia, sibelius software, The Orchard, Vodafone

This entry was posted on Tuesday, November 25th, 2008 at 7:35 pm and is filed under Digital Music News, Events. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.