Off-portal content market boosted through wholesale data tariff
The growth prospects for off-portal content, and mobile music services in particular, are inextricably linked to operators’ data charges: the consumer may be able to purchase a track for GBP 1.50 from a third party, but it costs several times that amount in data charges to actually download the file to the handset. As such, operators have enjoyed a monopoly on music download services because they were the only companies who could price on a ‘per track’ basis, eliminating the additional data download charge.
However, this is about to change. mBlox, the mobile premium services provider, has agreed a deal with Vodafone to drastically cut data download charges on a wholesale basis. It’s platform will enable content providers such as New Vision – a specialist mobile music services company – to run full-track download sites on behalf of labels like Ministry of Sound and Virgin V2. mBlox claims its wholesale data rates will make it possible to offer a ‘per track’ price of around GBP 1.50 and still generate profits for the service provider, artists, labels and content provider.
Vodafone is the first operator to agree, Orange is said to be poised for a similar announcement and mBlox says other UK operators will follow later in 2006.
It is one of the most significant moves to-date for the off-portal content business. Rapid growth is already occuring in this area and that will increase as lower data charges enables a greater range of services.
Content discovery, a key part of the user experience, remains a major issue, but with market growth will come greater creativity and market effects should soon refine these offerings into something compelling for consumers. Links with existing marketing channels, such as TV, radio and print magazines, will be a key part of the off-portal content discovery experience and I expect to see a number of companies focusing on this area.
Bango, the payment platform provider, has a system for linking printed ‘barcodes’ direct to mobile internet sites via the phone camera, but all solutions of this nature require software to be installed on the device and this will always represent a stumbling block to market acceptance. This is an area crying out for a standardisation effort – I’d like to see handset manufacturers, network operators, publishers and advertising agencies getting together to agree a standard for ‘barcode’ recognition via phone cameras. This would enable manufacturers to embed the software during the production stages and provide marketeers with a standard method of linking to the mobile internet.
Hi,
Just curious to know why online content giants like Yahoo and MSN are silent in the full-track music download race? Is there any place for these portals in the value chain for full-track music downloads through mobiles?
I imagine they are looking at this opportunity very closely. Both already sell ringtones and offer music-focused content. Full track is a logic next step.
To-date they have been held back by several factors:
1) Data pricing. Even with the mBlox partnership, it will remain difficult for portals to offer anything other than niche, regional services because very few carriers are supporting the new pricing model at this stage. In addition, it is very possible the operators have negotiated a final say in who is allowed to take advantage of the new data rates and would prevent the portals from doing so for competitive reasons.
2) Control of the user experience. Apple has set a very high benchmark for digital music delivery with the iTunes system. Portals would need much greater control over key user experience elements – such as the technology embedded in the client – to offer something which appealed to users. Thus far, only the operators have been able to exert enough influence on handset manufacturers to decide these kind of low level specifications.
3. Rights issues. Mobile licensing is a mess. There is a huge amount of confusion over who owns the rights to what. It isn’t as simple as just porting your desktop music catalogue into mobile format – this is a potential legal minefield for the portals.
I expect most of these problems will be resolved fairly quickly and both Yahoo, MSN, AOL – not to mention Apple – will offer a full track mobile service in one form or another within 6 – 9 months.