This week saw the entrance of yet another major wireless operator fully committing to a mobile music download service. AT&T's launch of Napster Mobile not only puts the nation's No. 1 carrier on par with competitors Sprint and Verizon Wireless, it does so by offering a greater number of tracks than either of its competitor's service. Together with AT&T's previously launched eMusic Mobile offer, and don’t forget the high-profile iPhone, the company is planting a strong flag in the digital music space.
However Verizon Wireless still seems like the one to beat here. While AT&T may have more subscribers, Verizon-the No. 3 carrier in terms of market share-is widely regarded as the top wireless music provider.
Verizon has been on a buying spree, snagging exclusive rights to such high-profile acts as AC/DC, Bob Marley, and most recently-Led Zeppelin, many of which had never before made their content available in digital formats. One Verizon executive told me he's been spending money like a drunken sailor on these deals.
The company also features more contemporary acts through tour sponsorships, TV and print ads, and featured placement on their music deck. Verizon considers itself the biggest music advertiser in the country, based on how much it features artists and their music in the company's ads. And unlike other brands that may license music just to use as a soundtrack for their commercials, Verizon and other operators are licensing music to sell it as well.
With AT&T now poised to ramp up its advertising initiative in suit, this marks a great step for the future of digital music. These operators art smartly putting the music and the artists first, focusing on the key element needed to make this new format catch hold with music fans.
But it's not that easy, and that leads us to the Unplugged side of the story.
Mobile music will remain merely a sideshow to the online iTunes juggernaut until the music and mobile industries can work out a flat-rate subscription model and present it to users in a sensible fashion.
Featuring artists is all well and good, and will likely do wonders for ticket and merch sales down the line, but the younger demographic is still going to hit up free P2P file sharing sites, to download their favorite songs, before they do so on their mobile phone while prices sit at $2.50 a track. With few exceptions, it's actually easier to get the song for free on LimeWire and just sideload it to the mobile phone that it is to buy it through any of the three mobile services available today.
Universal Music Group executive VP Amanda Marks told me the pricing isn't an issue, as they've seen a 200% increase in mobile full-song downloads in the last year. That’s great growth, but it’s also the low-hanging fruit and not a mass-market business model, which is why they are working on a project called Total Music to bring a sense of real scale to this industry.
AT&T has over 65 million subscribers. Imagine getting just 25% of them to add $5 a month to their phone bill to access all the music they want. That's over 16 million subscribers a month.
Ironically, carriers are afraid to try such a tack as it may overburden their precious networks-the ones they spent so much money developing into content-delivery channels in the first place. For them, $2.50 a track is great as it makes them money but doesn't tax the network too much. But $5 for all you can eat? Heck people might actually USE that.
But the labels are culpable here themselves. They need set prices low enough to hide these fees into either monthly service costs or the price of the device such that it won't scare people away. Yes, music is valuable and artists need to get paid, but we're competing against free here and that has to count for something.
The record labels and mobile operators are like two 800lb gorillas in the same room trying to work out some difficult details. I don't know about you, but whenever I see two or more monkeys in the same place at once, all they end up doing is throwing crap at each other.
It's time to stop the chest beating and focus on creating a sustainable, scalable model for the future of mobile music.