Posts tagged happened

Whatever happened to the mobile music revolution? You know, the idea that your phone would become a digital juke box, the main way to access and pay for the world’s music? So far, it just hasn’t happened, but today the British digital music business We7 is having another go. The success or failure of its mobile music app will tell us more about the economics of digital music services, which have so far proved very fragile, and whether anyone can prosper in the shadow cast by Apple.

We7, which is backed by the musician Peter Gabriel, has decided that previous offerings like Nokia’s Comes With Music failed to take off for two reasons – connectivity and cost. Listening to a streaming service over a 3G network is still a hit-and-miss affair, and the kind of mobile customers who might be interested – 16-30 years olds – are none too keen on paying for such a service.

So We7 has decided, both on the web and on mobile phones, that radio is the future. In other words, what its users are now mainly being offered is a personalised radio station – you tell it you like Katy Perry or Vampire Weekend and it plays you a stream of songs that match your taste. The music is free, but supported by advertising unless you upgrade to an ad-free subscription service – very few do, as far as I can gather.

The trouble with offering that on a mobile phone is that, even if the music is free, the user can rack up a big bill for mobile data. So We7′s plan is to load up your phone with music when you’re on a wi-fi connection and store it on your phone, to be accessible whenever you want it.

It all sounds very clever – but I’m still not clear how an ad-supported service like We7 – already in quite a crowded digital music market – is ever going to become sustainable. When I spoke to Steve Purdham, the CEO, he said the whole industry was still loss-making: “Nobody is making money,” he told me.

He pointed out that Spotify in Europe was seeking out new investors – apparently successfully – and Pandora in the United States was preparing an IPO or stock market flotation.

“The fact that we are all looking for funding says that nobody is making money yet.”

But he said there had been a big improvement over the last three years, on both the revenue and the cost side. “Three years ago the economics were impossible, but now we are making ground.” Advertisers were getting much more interested in the audiences that music services offered, while the music labels were getting more realistic about the rates they charged for licensing.

In particular, they were prepared to offer much better deals for radio services, rather than on-demand streaming businesses like Spotify, where you choose which tracks you want to hear. But is the kind of young phone users that We7 is targeting really going to want a service that invades the personal space which a phone now represents? “They don’t care,” says Mr Purdham. “They expect to be surrounded with adverts, the clever thing is not to be too invasive.”

He is betting that his model – a radio service on the move – is the way forward.

“It’s about making it personal, making it easy, making it portable.”

But We7 is a small player. It is trying to do what the giants of the mobile world and the big record labels have been attempting for years – to provide a mobile music service to rival Apple’s iTunes. And so far a combination of poor marketing, clunky user interfaces, and high data costs have left them as also-rans.

I haven’t seen any statistics but I wouldn’t mind betting that the revenue from mobile iTunes downloads dwarfs anything earned by anyone else in this market. Perhaps that’s about to change – but don’t bet on it.

• Bookmark with:
• del.icio.us |
• Digg |
• Reddit
• – What’s this?

From www.bbc.co.uk