What would it mean for the market and the industry if the leading music download and mobility company did not believe that cellular networks were going to be a major distribution channel for full musi
Mark Desautels is VP of wireless Internet development for CTIA, the Wireless Assn.
The most startling statement I heard this year on my annual West Coast swing to meet with content and technology companies new to the wireless industry came from an executive at Apple Computer.
The executive posited, "What if Apple doesn't believe in the wireless model for full music downloads?"
Apple, of course, is the company that proved the download business model for music, and today it is light years ahead of its competitors as the primary distribution channel for music downloads. Obviously, too, with its iPod and progeny like the iPod shuffle, Apple is the leader in making gigabytes of music mobile.
So, let's rephrase that rhetorical question as an industry challenge: What would it mean for the market and the industry if the leading music download and mobility company did not believe that cellular networks were going to be a major distribution channel for full music downloads?
It would mean that the players in the wireless music industry -- labels, handset manufacturers, carriers and others in the value chain -- had better sharpen their thinking about how to create interest and tap this channel before assuming that it will be a natural and profitable extension of their current activities. If the smartest people in the download and mobile music business have questions, so should the rest of us.
Growth in wireless revenue from music -- mostly ringtones -- continues to be the bedrock of most analysts' projections for overall wireless data revenue. But even if the current business model for ringtones continues to thrive -- despite the threat raised by such ringtone-creation products as Xingtones -- the nascent mobile music industry will have to reconcile its business anomalies if it is to get traction with value chain members and consumers.
Among the business issues that seem to be outstanding are questions about compensation (for example, if a carrier replaces Best Buy in the distribution chain, does it get the same cut of each sale that Best Buy would have received?) and potentially more vexing questions about pricing.
Apple has demonstrated that those kinds of issues can be solved. Indeed, Apple's ability to crack the music industry code was key to launching its music download business. If business issues are the only impediment to full mobile music downloads, there is no reason Apple could not be just as instrumental in solving those issues for mobile -- assuming it believes in the model.
And there's the rub. It might not be the business issues, but the use-case model that worries Apple (again, I have no insight into the company's thinking; I am only speculating). Currently, the mobile music use-case is based primarily on the synchronization model employed by the iPod (and MP3 players of its ilk): Music is downloaded to a computer with which a mobile music player synchronizes and -- presto! -- music to go.
But some in the wireless industry may be resistant to that use model because it does not include over-the-air download revenue. However, if there is one thing we have learned about the digital media business, it is that consumers will have it their way -- legally, if properly empowered, or illegally if they are thwarted. But they will have it their way.
Getting consumers to understand the value of the wireless download channel may first require accommodating their current usage model. Handset manufacturers are betting that consumers will want dual phone/media player devices. But will customers want devices to which they cannot port music they already own?
Long before there was iTunes, there were portable music players (including the iPod), which allowed consumers to take advantage of music they had already paid for. Subsequently, Apple added a download service that is helping revolutionize an industry.
Clearly, there are no sure things in this new world of mobile entertainment. Full music downloads over wireless wide area networks may not prove to be the important distribution channel so many of us think they could be given their ability to provide whatever the consumer wants whenever they want it. That's an important attribute in an industry like music that appeals to the emotions of the moment.
But all parties throughout the value chain ought to pay close attention to Apple's two-step road map -- mobility of existing music leading to downloading of new music -- if wireless full music downloads are to prove similarly successful in leading the music and wireless industries to the next level.