New technological advances, as well as legal and regulatory changes, are tearing down long-standing barriers between industries.
As Part 1 of this three-part series notes, digital voice, data and multimedia content delivery operations are converging with both fixed and wireless telecommunications services.
In addition, a host of telecoms, cable, computing and media companies are vying for a share of the fast-growing m-commerce, mobile voice, data and multimedia markets.
Seeking a Status Quo
Mobile telcos are being driven to open their networks to third-party content providers and aggregators, according to Juniper Research senior consultant Bruce Gibson.
Gibson cites the following contributing factors:
- The realization that operating a walled garden restricts the market;
- The realization that they can’t do everything themselves — they need the extended value chain;
- The realization that they don’t understand some of the content markets in which they are playing — hence, the increasing trend towards outsourced content management and delivery;
- Pressure from consumers to access lower cost and/or more specialized content (off-portal); and
- Reduction in the cost of access to off-portal content via wholesale capacity deals, as with mBlox and off-portal music.
“Mobile is about instant access and gratification. If you don’t get something close to that you might as well wait for richer experience on your PC or TV,” Gibson told the E-Commerce Times.
“Where that line is will be different for different users and user groups,” he continued. “Many of the developments in handset design, UI (user interface) and search/navigation capabilities are about shifting that line more in favor of mobile.
“The problem is that many of the solution providers that address the mobile UI, whether they be providing on-device portals, operator portals, smart Internet access/browsers, cell broadcast technology, etc., have to some extent been picking the low-hanging fruit, so they have gone into areas best suited to them.
“They are all addressing slightly different aspects of the same problem, or at least providing different solutions to the same overall problem — accessibility of content/information over a mobile phone,” Gibson added.
The Quad Play Outlook
“While I am sure that the mobile phone will become a multifunctional communications and entertainment device for many users in developed mobile markets, I am not so convinced that this will be universal, at least for some time,” Gibson explained.
This will not happen in developing markets very quickly because of the lack of underlying infrastructure — both technical and business, he added.
Some people and companies will go for separate device and communications providers because of the following:
- In principle, they are wary of putting all of their eggs in one basket;
- They genuinely believe that separate environments/devices provide the best technical solution;
- They are wary of paying for something as part of the package that they don’t need; and
- Pure inertia.
When asked if he forsees the evolution of “quad play” services as a good thing, Gibson responded, “Yes, but don’t expect everyone to go for it hook, line and sinker. At the end of the day, mobile entertainment is an extension of the overall electronic entertainment environment. It has its own strengths and weaknesses, but it is not a completely separate world.”
Mobile music is currently the largest sector of the US$17.3 billion (and growing) mobile entertainment market, and 80 percent of mobile music revenues come from cell phone ring tones.
“Infotainment,” which comprises a wide variety of sport, leisure and information product, is the second-largest category and one still dominated by computer wallpapers, according to Gibson’s Juniper Research report entitled, “Mobile Entertainment Markets: Opportunities & Forecasts, 2006-2011.”
mVisible has been a pioneering player in the mobile music and m-commerce market. On Dec. 12, the company announced that it was partnering with mobile transaction network provider mBlox to enable mVisible’s roster of independent musicians to sell ring tones and other musical content.
Content would originate at artist Web sites, MySpace pages and the MyxerTones site and be distributed across the major U.S. mobile networks — including Cingular (now AT&T), Sprint, T-Mobile and Verizon using mBlox’s premium SMS (short messaging system) billing infrastructure, a core part of the company’s mobile transaction platform.
More than 7,500 indie artists have used mVisible’s MyxerTags and MyxerCodes technology to share and sell content since it launched last spring, according to mVisible statistics.
“mBlox’s extensive network, its established relationships with all the major U.S. carriers, and its commitment to customer service make it the clear choice to handle messaging and premium SMS billing for MyxerTones in the U.S.,” said mVisible founder and Chief Technology Officer Myk Willis.
“With this partnership, we can offer indie and unsigned artists the same access to the mobile content market as that enjoyed by major label recording artists,” he said.
As a content aggregator, mBlox lays claim to operating the world’s largest mobile transaction network, though as a privately held company it does not release volume, revenue or earnings figures directly to the public.
“We have built our business by focusing specifically on the billing and delivery of mobile content and services,” mBlox president and CEO Jay Emmet told the E-Commerce Times.
“We do not build applications or generate content. As a pure play service provider with direct connections to all the tier-1 U.S. carriers, we offer mVisible unparalleled service levels by operating our own SS7 (signaling system 7) equipment and not relying on bandwidth shared with operators’ platforms.
“mBlox maintains a zero tolerance security policy to secure and protect all data, and our core platform also provides mVisible and its musician clients the flexibility to handle high degrees of fluctuation in message traffic,” Emmet continued. “We hide the complexity of our business for mVisible so they can provide their clients secure, reliable delivery and billing of their music.”
Regarding the agreement with mVisible, Emmet said, “We can’t release specific numbers of our clients, but we would expect to see strong growth from this specific application as the numbers of handsets that offer this capability continues to increase dramatically, and as the adoption of music on cellular devices rapidly expands.”
Digital music distributor and distribution technology developer IODA (Independent Online Distribution Alliance) has built a successful, fast-growing business by signing up independent music labels and artists and using its technological and marketing expertise to distribute their music via the Internet and, increasingly, to mobile phones and other handheld devices.
IODA distributes a catalog of more than 700,000 audio tracks in all genres to more than 300 digital music retailers, subscription services and mobile platforms around the world.
Recently, the organization announced agreements that lay a foundation for a planned expansion into Europe.
At the Midem conference in Cannes, IODA on Jan. 24 announced a partnership with Harmonia Mundi, a leading label and distributor of classical, world and jazz recordings throughout Europe, to digitally distribute the latter’s catalog to hundreds of digital music outlets globally. IODA will also handle domestic digital distribution of Harmonia Mundi’s catalog in France.
Two days earlier, having completed its acquisition of Uploader, a leading European digital music distributor based in London, IODA announced the official launch of IODA UK, which will serve as IODA’s European headquarters.
IODA founder and CEO Kevin Arnold and Uploader co-founder Martin Goldschmidt finalized the acquisition by signing documents at the Midem conference.
“This deal puts our labels and employees in the best game in town for digital distribution and marketing in Europe, North America and, soon, places beyond,” Goldschmidt said in a statement. “We look forward to moving into the next phase of IODA’s international growth together.”
Having entered the mobile music market two years ago, IODA has witnessed some significant changes over a relatively short period of time.
The biggest positive shift has been the move from dealing in ring tones to the distribution of full-track downloads, according to IODA’s Mitchell. “We’ve known all along that a ring tone is, at best, a lifestyle product, and at its worst, a novelty that only kids care about.
“Independent music has always been about quality and integrity, and fans of independent music listen to it because they seek it out and thoroughly enjoy it as music. Full-track downloads is more in sync with the aesthetic of indie music, and our sales in the U.S. are very healthy. We are able to work with our partners deeply on marketing and drive demand for lesser known artists,” he said.
Enabling full-track downloads has also driven technological improvements, he continued. “Full-track has really opened the door to more innovation and better UI with regards to content.
The carriers and MVNO’s (mobile virtual network operator) in the United States are really starting to experiment with their applications, UIs and content offerings. They are discovering that there is a huge market for independent content, and if they provide their users with something unique and special, they are rewarded. Europe has always had a larger demand for independent content, and they too are starting to focus product development effort on surfacing ‘the good stuff.'”