At the College Music Journal conference in New York today, representatives from RCA, Napster, nightt, and the CTIA talked about the problems surrounding the distribution of music on cellphone networks during a panel called "Pocket Jockin': Mobile Music and the Future of Distribution." That empty chair on the end belongs to Richard Winn, Artist Development, Zune.
Here are the highlights:
(I essentially liveblogged this, although NYU's Wi-Fi didn't let me post in real-time, so these are not direct quotes but rather my own paraphrasings.)
Sean Rosenberg, Director of Mobile Marketing, RCA Records – The cellphone screen is so small that there's not much room to get the feature placement on the decks [the portals on cellphone music services].
J__ohn Fogerty, V.P. of Mobile, Napster__ – Previously people saw the iPod and computer as center. The next stages are the living room (it will always be the PC), car, and also the mobile phone. It's a unique platform – allows sideloading and connected device. It also encourages impulse buys, because people can buy right when they hear something on the radio. NTT Docomo [their partner] is a massive brand. We need to leverage that marketing power and extend their distribution capabilities.
Nihal Mehta, nightt - The next step is being able to share media on mobile platforms. Everyone's doing this on MySpace, and photos drive 50% or so of usage on Facebook. After photos, the ability to share music is next.
Fogerty (Napster) on how bands and labels can get this kindof distribution: The carriers' approach to music has evolved over past2-3 years. Carriers' eyes got really big in terms of owning the whole[cellphone music] thing – doing the programming themselves, hiringexperts, and running their own music store. In past 2 years, they'verealized how difficult that is. At Napster we have 150 people whosesole focus is to create the music experience. At carriers, the averageis about 12 people. Carriers will be more dependent on label partnersand service partners to complete their music story. As a band orlabel, you can't reach carrier, but the good news is that this will geteasier as third-party brands take over.
Rosenberg (RCA) – Carriers like to position music as a sexyoffering, like Best Buy, as a loss leader. But there are so few peoplethere thinking about content. At AT&T, I have to deal with aseparate person for ringtones and ringbacks; it's very silo-ed.
There's IODA and The Orchard, but other than that, there's such limitedopportunities on these decks. When artists are promoted, their numbersgrow in terms of sales even off of the carrier, but it's hard to findthe people to talk to.
Mehta (nightt) – Are there any carriers here? No? We hate the carriers. Wedon't deal with them if we don't have to. The trend is, everything'sgoing off-deck. 60% of mobile internet traffic is off-deck in Europe.
Radiohead.com is an example (no label, Napster, or carrier inbetween). Radiohead is an exception here, but in Japan, the vastmajority of mobile traffic is off-deck. It makes most sense tocircumvent carriers – unless you can get in the top ten spots on thedeck.
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Fogerty (Napster)__: The carrier wants lots ofcompensation for their channel, and the label wants compensation forwhat they have. There's not a lot of room to maneuver in the middle.
Because music is such an important service to offer, especially with 3G
networks starting in the US for the first time, they need to convinceconsumer to upgrade their data speeds. They're coming off of their,
let's say, historic enthusiasm for negotiating revenue share.
Mehta (nightt) – A lot of the consumer ringtone shops are closing theirdoors, because it's getting so commoditized. You pay the label and thecarrier and there's very little left.
Rosenberg (RCA) – You're going to sell more music if youlower the prices, but with all the writers and royalty owners andmarketing costs, we've got to get a lot out of it. There's so muchgreat technology out there but if they don't figure out the rights,
there's never going to be the content, and content is king. YouTube isa success because people are uploading all the copyrighted content.
NTT Docomo has made strides in bringing on third-party retailers andnetworks.
Rosenberg (RCA) - Singles and albums in the US… we've madeourselves such a pop-driven culture. Now consumers can get whateverthey want, so you can't sell only one good single. This requires a new perspective,
especially in the hip hop zone. Are you a ringtone artist? Is therean album? [The artist] Hurricane Chris – we had 2 million ringtones sold, and thealbum comes out next week. We're trying to figure out whether themastertones sales are going to translate into music sales. You've gotto rethink your whole strategy… indie/alternative bands sell so muchthrough iTunes. With hip hop, are ringtones where you make yourmoney? Your money's going to be coming from different places, so you haveto market it accordingly.
Fogerty (Napster): Mobile is a huge opportunity for everyonein this room. With a connected device, we can ping any consumer acrossthe country and cater the experience to that person. Accessing yoursame music from anything has mass-market appeal.
Mehta (nightt) on how close we are to being able to buy music once, ratherthan over and over: Apple is starting to bridge this, another companycalled Navio is doing this (buy once, access forever). Content is kingbut content is free at the end of the day. YouTube, Google, etc. – I'dlike to see a fully ad-supported free music play.
Fogerty (Napster): We have that. FreeNapster.com. The entire catalog is available in ad-supported way.
Rosenberg (RCA): We talk about the wireless internet, butreally it's the internet accessed through a wireless device. Whatabout GPS, camera features? There are different ways of looking atconvergence, which can be a dangerous thing, like thatfax/printer/scanner/everything device. The Canon model was good atphotos, the HP had the speed, but if you cram in too much you get aSwiss Army Knife of nothingness. A lot more has to happen there. Whenyou talk about why do we need to buy the same music over and over,
[it's Sony's and Apple's fault for providing different systems]. Itgoes back to that interoperability, like the CD.
Mehta (nightt): Who owns the consumer relationship? Apple? Napster?
Label? It's Radiohead. In Europe, Vodaphone has stronger relationshipwith fans than Foo Fighters. So the approach needs to depend on wherethe relationship is stronger.
Fogerty (Napster): DRM is a curse and an opportunity. OurWindows-based DRM enables us to do something cool, close to the originalNapster. That experience can't happen if you don't have DRM. If wedid DRM-free subscription, people would download everything in a monthand unsubscribe. The curse part is that it confuses the hell out ofthe consumer. We don't make MP3 players, and we don't care what peopleuse, but we can't sell to the iPod user… It makes it really hard.
Mehta (nightt) on whether Joe Average will need to add DRM: This is alreadyhappening with Revver and YouTube. In some cases you sign away rights,
but in others, you get a share of ads. The question is, how do youfingerprint it so that that content is not pirated.
Rosenberg (RCA): There's so much opportunity for any artist to be their own business,
but it depends on how you define success. If you're not platinum, itdoesn't make sense if you're doing worldwide promotion. But if youhave your own direct-to-consumer business, you can do well without evenselling gold, but you have to treat it like a business. iTunes is aspreadsheet – it's not enough to post something, you need to pointpeople to it. People need filters.
Fogerty (Napster): We have database of what they'vepurchased, what they've played. The opportunity is there. It's up toApple and Napster to do this right, to personalize the experience theright way. We need to deliver content to consumers when we knowthey're into it. We're not there yet, but it's a Nirvana state – it'scheaper, more efficient to distribute. We have the same money, but wecan spend it across more artists.
Rosenberg (RCA): The labels are turning into publishers – afew pennies here from YouTube, pennies from a stream, but at the end ofthe day, it's driving down the profitability.
Rosenberg (RCA) on why we have to pay again for ringtones: Ringtones are about apersonalizing consumer. It's same as putting rims on their car, orlaces on their shoes. It means something to them.
