Sony StreamMan and Outsourcing Music
By Steve Wallage, Mon Oct 11 08:00:00 GMT 2004

Every operator is developing a mobile music strategy, but how many will be prepared to outsource -- and where does Sony StreamMan lie in the debate?

Mobile music is coming out the ears of the industry at the moment. As typically happens in the mobile industry, there are widely differing versions of mobile music promoted by very different types of players with differing business models. The latest example is a plan by music label EMI to use downloads as a way of encouraging users to then go and buy the CD Ė a sort of mobile music ad.

Amongst all the noise, Sony StreamMan was trumpeted at CeBIT and formally launched on June 16 with TeliaSonera Finland. Although there have been some positive reviews of the service, on September 27, it was suspended with the operator announcing it was evaluating the offering. The rumor is that the two companies cannot agree on how to take the service forward. Currently it has no connection or subscription charge, and users pay only for the data transfer.

However, this is a mere blip on Sony's roadmap, as the company plans to integrate a fixed Internet download service and line up several US operators.

The StreamMan Service

So what is the Sony service? The proposition to operators is that Sony will handle the whole content delivery and provision. It is working with PacketVideo Network Solutions, part of Alcatel, for the server and media player technology. Other partners include End2End for service delivery infrastructure and BeepScience to provide the Digital Rights Management (DRM).

The service itself provides highly customized music. Subscribers can listen to tracks from not just Sony artists but other large and independent labels. They can also listen to channels which are categorized by the type of music. Users can then vote on the different tracks which are played on each channel Ė say 90's hits Ė and these votes are used to adapt the play list. The TeliaSonera service also provided a news feed.

Another interesting feature is the multi-channel aspect. The forthcoming broadband Internet version will allow users to send music and save play lists between their PCs and mobiles.

The Decision for Operators

Now the decision for operators is whether to use a service such as Sony StreamMan or develop their own offering. Sony has something of a reputation in the digital media space for overpricing and being overprotective of copyrights. The problems with TeliaSonera Finland may also prove to show some technical challenges with the service. Outsourcing music has some risks and obviously reduces margins, but operators are becoming increasingly open to the idea for a number of reasons.

One, itís not a core competence. Two years ago, most mobile operators thought they could be the kings of mobile content. Now most are realizing they have few skills in the area. Itís a lesson a lot of the fixed operators learnt the hard way, although some risk going down the same way with broadband entertainment.

Two, if they lose the content battles they can lose the customer. Operators are desperate to maintain that loyalty and ensure services are accessed through their portals. A host of independent music providers, the handset manufacturers and new players threaten this. The operators need to ensure that they offer a great music service to compete.

Three, the advantages of outsourcing. As the complexity of services on GPRS and 3G grows, then the management and provisioning of new services becomes daunting. Operators can use a setup like Sony StreamMan to offer the service, and enforce the service level agreements to guarantee reliability. Users aren't going to stick with a mobile music service that can't offer reliability.

Four, the investment analysts are telling the operators to stick to what they know best. They don't see it as margin loss, more being able to stick to the things they do well and not try and start brokering deals with individual music labels.

Five, multi-channel will become increasingly important. All the research shows that users want to be able to switch between mobile and fixed devices, PCs and mobiles, home and away. This is something that doesn't play to the strength of the mobile operators who want dedicated mobile solutions. They need to work with partners who understand the music industry across different formats and situations.

Its not a natural choice for the operators to go to a third party for a service like music downloads. Surely thatís their core strength? Unfortunately, for them, itís not. They should look at whom best to partner with to provide the best service. Maybe they can even keep their brand on the service. If they don't, music and other content services will start to be dominated by the guys who really understand content, and potentially the handset vendors if they can get the right partnerships in place.