The Mobile Industry Just Wants To Rock
By Mike Masnick, Fri Aug 27 00:30:00 GMT 2004

Ringtones got the mobile music party started, but now the mobile industry believes it can become a much bigger player in the music business. Is mobile music the next big thing or a train wreck waiting to happen?

The recording industry makes it sound like the world is ending all around them, but you wouldn't know it by looking at how the mobile industry is moving as fast as possible to become the new platform for the music industry. The success of ringtones and the perceived potential for ringback tones, combined with the success of online music download stores like Apple's iTunes has the mobile industry believing that the handset can be the musical device of the future. There's a compelling vision to it. The device is always connected, so it's easy to get new music. People always carry their phone around, so that makes it easier to listen to music whenever and wherever a person wants. With the rise of "convergence" it seems natural for the music player and the phone handset to merge.

At least, that's the case in the ideal world. Part of this rush towards mobile music is the amount being spent on ringtones -- often much more than downloading a whole song from a download store online. Combine this with the mobile industry's hunger for "any mobile content that sells" and it seems like a natural combination. Everyone is getting into the game. Today, Siemens launched an entire mobile music division to build a white label music download store that mobile operators can offer. Of course, many companies have already come up with their own solutions. T-Mobile already launched a music download offering, though, it focuses on somewhat expensive "mixes" rather than full songs. 3 UK got into the game by offering music videos to help show off its video capabilities. Over in Japan, KDDI launched a music download service -- though, it (smartly) decided to price the mobile downloads to match the price of online downloads. Sony teamed with TeliaSonera to stream music to subscribers. Nokia has teamed up with Loudeye, and the announcement that generated the most attention of all was Motorola's deal to make a mobile version of iTunes. These days it's tough to find a player in the mobile space who hasn't staked out a music play of some kind.

However, in this rush to answer both the mobile data and recording industries biggest questions about future business models, it appears many companies are ignoring history and technology. The current business model, based mostly on selling mobile tunes at very high prices, is going to wear thin on many users who already feel ripped off for paying so much for CDs. Combined with the copy protection most of these offerings include, users are going to wonder why they need to pay so much for songs they already purchased, which can only be listened to via a single device. While some still expect a new business model to emerge that has the appearance of free, without really being free, too many Internet users have learned how to make music free already. While 3 may believe it will be able to keep the Internet off its mobile phones forever, most trends suggest otherwise. Mobile phone platforms are increasingly opening up to developers and applications like Xingtone are only going to offer opportunities for users to route around expensive toll booths and annoying copy protection.

That doesn't mean mobile music isn't a potentially huge business. Getting users to download and stream mobile music opens up a variety of possibilities for new applications and services, while introducing many new subscribers to the very concept of mobile data. However, price gouging now, setting the tone for how both the recording and mobile industries are viewing the mobile music market, is only setting these companies up for a big fall -- the same way Napster took the recording industry by surprise online. In this situation, however, everyone has the Napster story to learn from. So far, unfortunately, they seem to have picked up the wrong lessons. Charging too much and locking everything down only encourages users to figure out a way around the blocks -- or worse, will make users wonder why they should bother at all.