Event Promotion
The Mobile Music Generation: a Technology Roadmap
25-11-2005
by
With mobile phone manufacturers, chipmakers, mobile operators and content companies all devising strategies for the emerging Mobile Music market segment, real opportunities exist for forward-looking Irish companies.
However, Mobile Music is about much more than just making tracks available to consumers with advanced handsets. Indeed, network infrastructure, marketing strategies, payment options and even the user interface on mobile phones must be carefully considered if there is to be mass market uptake of Mobile Music and other data services. This was the overriding theme of the seminar entitled 'Mobile Lifestyle -"The Mobile Music Generation,"' which brought together an eclectic mix of speakers from Ireland and abroad. The event was sponsored by Enterprise Ireland and the Digital Hub, and was held in the Digital Hub's Digital Exchange Building on 27 October 2005.
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The day began with a brief welcome from Jim Cuddy, the head of IRC Ireland, Enterprise Ireland's Innovation Relay Centre, who chaired the morning session and helped to outline the purpose of the event. "We are here to present you with emerging technologies that you can use to develop your own R&D and marketing strategies," Cuddy explained.
Dr. Brendan Finucane, Director, Enterprise Ireland, who also delivered a warm welcome to attendees and went on to offer an overview of the nascent mobile music segment, noting that analysts have predicted that by 2007 there will be more wireless high-speed Internet connections than fixed-line equivalents. "Just this morning, I was travelling on the bus and I noticed that over 30 percent of people on the bus were using a mobile phone. About 40 percent had a music device of some kind," Dr. Finucane commented. "There seems to be an insatiable appetite for music," he added, saying that competition in the market was growing tougher on an almost weekly basis.
Building Alliances and Acknowledging the Power of the Network
Following the introductory comments, the first presentation of the morning session kicked off, with Sascha Lazimbat, the co-managing director of Germany-based Zebralution introducing himself to attendees. Lazimbat's discussion began with a description of his own business, which consists of the distribution of digital music for independent music labels. With over 120 label licensors from all over the world and more than 25,000 tracks, video and artist images, Zebralution has in just over two years signed deals with over 70 licensees, which combined, sell music content in 200 online and mobile shops.
Technical advances in the sector have proven important for the Mobile Music market segment, he said, noting that in Germany some 100,000 full music tracks are downloaded by consumers each month. "That's a big figure, considering the small number of 3G handsets in use," he said, adding that the now established ringtone business still accounts for a massive proportion of the company's revenue.
Lazimbat went on to make predictions and also offered advice, claiming that "all you can eat" subscription services would eventually dominate the industry, with pay-per-track downloads slowly fading away. Another prediction was the rise of branded third-party music downloading services run by established industry players such as OD2, iTunes (Apple Computer) and Napster. But in his to-do list for the sector, he recommended that too much phone customisation by operators, disparate digital rights management (DRM) strategies and a lack of interoperability between phones and PCs would hamper growth. Finally, Lazimbat urged mobile telecoms to offer "realistic" airtime packages to consumers, a notion that was echoed by other speakers later in the day.
Next up was Paul Geoghegan of telecoms equipment maker Ericsson, who spoke about the networks that make mobile data services possible. Like Lazimbat, Geoghegan began by charting the development of new applications in his area of expertise, going on to point out the boom in new subscribers to mobile services -- and advanced mobile data services in particular. "People are very interested in broadband, or rather broadband capabilities," Geoghegan commented, predicting a rise in demand for mobile broadband services as laptops replace PCs.
At the heart of Geoghegan's presentation however were the newer technologies, such as 3G (UMTS/WCDMA), High-Speed Downlink Packet Access (3.5G/HSDPA), Digital Video Broadcast (DVB) and Multimedia Broadcast and Multicast Service (MBMS), which enable operators to deploy more data intensive services such as mobile television. "The networks are being enabled now, and the terminals will be place, as will industry standards. What we need now are suitable applications," Geoghegan said, calling on attendees to fill that gap.
Ending the morning session was a talk from Eamon Hession, the Managing Director of Irish mobile marketing technology and services company Puca. Hession also serves as the current Chairman of the Mobile Marketing Forum (MMF), an industry group that aims to grow and develop the mobile data and messaging market in Ireland through the promotion of standards, best practice and co-ordination.
While Hession noted that mobile marketing has been a success in Ireland -- with SMS shortcodes generating about EUR60 million in annual sales -- he said that notable obstacles must be overcome. Industry standards and co-ordination are vital, he explained, adding that many consumers are confused by third-party subscription services. Also slowing industry growth are premium rate SMS scams and mobile spam. But a more significant impediment is consumer confusion over the data fees that operators charge for mobile downloads, echoing comments from Sascha Lazimbat earlier in the morning.
Irresistible Technology and Irreconcilable Differences
The Digital Hub's Director of Marketing and Strategy Dr. Stephen Brennan kicked off the afternoon session, and quickly moved to the day's fourth speaker, Dr. Barry Vercoe Professor of Media Arts & Sciences at the Massachusetts Institute of Technology (MIT). Dr. Vercoe opened his talk with a rather stunning statement: "MP3 is dead! Now get off it. I'm going to tell you what is going to replace it." From there, Dr. Vercoe briefly charted the evolution of digital music formats, beginning with CD/DAT, moving on to MP3, MPEG-AAC, AC-3 and others, and finishing with MPEG-4.
In his presentation, Dr. Vercoe noted that most digital music formats have been developed within academia, and were never initially intended for commercial use due to the demands the formats placed on computing systems and Digital Signal Processors (DSPs) specifically. "Everyone said MP3 would never be really be used when it was first developed. It just required too much processing power," he said, adding the similar things have been said about MPEG-4, which requires processors to perform mixing of multiple, simultaneous music tracks at the client end. Nevertheless, the format has several advantages over MP3, with the most evident improved music quality in a relatively small file size.
Dr. Vercoe went on to demonstrate the advantages of MPEG-4 with several selections of music played using a 650Mhz Analog Devices processor, which only slightly more advanced than typical chips found in new mobile phones. "Before long we'll have chips that run at 600Mhz in mobile phones. By bringing MPEG-4 to mobile means you can do all kinds fun things that just aren't possible with MP3... that includes better quality music, but it doesn't end there," Dr. Vercoe concluded.
With an entirely different angle on the nascent Mobile Music industry, as well as the broader mobile content industry, Jim Grams of Black Oak Associates, and formerly of US wireless carrier Cingular Wireless, discussed some of the obstacles to the deployment of new data services by US mobile operators, as well as operators in Europe.
He said there is a desire among US operators to control the content that consumers consume through the use of carrier-specific wireless portals -- a notion referred to in the industry as the "Walled Garden" Third-parties selling services within the Walled Garden -- be it music or other content -- have the benefit of robust billing mechanisms and a semi-captive audience, while those outside the garden have more freedom to develop niche content, but lack the ability to effectively charge for their services.
"'We don't want to just be the pipe.' that's something we often hear from carriers," Grams explained. Unfortunately, this position does not mesh with the wants of many third-party content providers, who want a direct relationship with the consumer and feel hindered by the efforts of carriers. Yet, mobile operators are also hindered by the fear of a crackdown from the US Federal Communications Commission (FCC), which could step in to regulate mobile content were inappropriate services made available to the public on carrier portals
The last speaker of the day was the Chief Operating Officer of Irish company Cibenix, Mike Brady, who explained that consumers are aware that a world of digital content is available through mobile handsets, but often do not know where to look to find it, as service discovery often requires users to actively log-on to a network. That's where Cibenix's technology comes into play, helping users to locate services through a client side -- as opposed to an on-line -- menu, through which music, games or any other services may be downloaded.
Interestingly, the idea plays into mobile operators' desire to keep customers within the so-called Walled Garden, he said, claiming that the vast majority of downloads by Vodafone's customers in Europe in 2004 were off-portal. Brady also said that only 10 percent of mobile subscribers download data on a daily basis, while over 50 percent never use mobile data services at all. "This is a real problem," he said. "It's because the browser experience is ugly." Brady added that consumers have to "click" too many times to access relevant content.
Mobile Music: Full of Opportunity
Indeed, Brady's closing remarks were applicable to the presentations from all of the day's speakers, who, combined, helped to demonstrate the complex nature of the mobile content industry and the market for Mobile Music in particular. Indeed, the thread that ran through each presentation was the idea that the needs of device makers, operators, content creators and consumers are not always aligned. Success in this industry will require enterprising companies to cater to the needs of all stakeholders, simultaneously. In some instances, finding common ground means helping to resolve the disagreements between disparate industry participants, a strategy that Puca and to a lesser extent Ericsson have pursued. Other times, success could come in the form of new technology or business practices that are simply irresistible to all parties. Either way, there are still enormous opportunities for inventive companies in the Mobile Music market segment -- opportunities that simply cannot be ignored.
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