The economy isn’t going to destroy the mobile music industry just yet. In fact, I’m here to tell you that 2009 will be a breakout year for mobile music.
Why? Because the carriers, the music labels and the handset makers say so. Oh, and consumers will likely stay on board too.
The carriers. The iPhone provided a major wake-up call to wireless carriers. After all, if Apple is willing to risk cannibalizing its own iPod business, you know there’s truth to the old “wallet, keys and phone” mantra. And judging by the high number of new carrier music services and news announcements cropping up, it’s clear they’re scrambling to compete. Anyone developing mobile music apps right now will tell you the carriers are jumping in with both feet, and a slew of new music apps likely will be introduced to consumers in the new year.
The labels. Woe is the music industry… Anyone who has paid any attention to the music industry over the last several weeks (months, years) knows that it is an industry in peril. As a result, the labels are facing ever-increasing pressure to find new and innovative outlets for their artists. Mobile provides a crucial opportunity.
The OEMs. It’s a growth story all around… Not only are more people using cell phones every day, but they’re upgrading and adding capabilities regularly. Today, 65% of handsets are music-enabled, up from 45% in 2007 (NPD Research). And because that number grows, the user base for mobile entertainment continues to expand – so the industry could thrive even if every consumer buys less music.
So that’s the industry. Here’s what we know about consumers:
The lipstick effect. In slow economies, people look for inexpensive ways to boost spirits. Historically, sales of red lipstick consistently go up when the economy goes down because it’s a cheery, inexpensive way to feel better. Mobile music is also a cheery, inexpensive way to feel better.
So far, so good, right? But there is one more thing that will likely make 2009 a banner year for mobile music. Let’s call it the special sauce.
Mobile music could be “free.” It was Chris Anderson’s “Long Tail” that redefined a variety of markets, including online music. His most recent – “Free! Why $0.00 Is the Future of Business” – will likely redefine mobile music and a slew of other markets as well. Not only is the mobile music market ripe for change, but a host of new payment models are on their way. Some carriers will lower prices for OTA downloads, and others will bundle mobile music services with data packages, representing the majority of profits for mobile music developers. Nokia, for example, has added free unlimited music downloads with the purchase of specific handsets.
Even with such potentially significant and consumer-friendly pricing changes, the latest Screen Digest reports that subscription music and video revenues will double by 2012.
So, video may have killed the radio star, but mobile will breathe new life into the music industry. I’m banking on it.
Tsui is the CEO and co-founder of mSpot, which operates a mobile music and video on-demand network in North America