A Thought for Record Labels About Mobile Music

The hype around mobile music is building and building, with record labels looking on with starry eyes. But, counter intuitive as it may sound, now might be a good time for the record labels to take a step back and take a long hard look at their involvement in mobile.

Mobile music ironically looks less compelling in many ways now than it was a couple of years ago:

• 24 months ago ring tone sales were booming and true tones sales were ramping up. The music industry looked at ring tone growth as being indicative of major mobile music opportunity. The problem is that ring tone adoption has more in common with logo buying than it does music listening. Its identity not music consumption. Hence the anticipated mass market conversion factor hasn’t happened.
• The other factor is that 24 months ago mobile handsets were much more of a closed ecosystem where OTA downloads was the main realistic way of getting music onto your handset…unless you struggled with Bluetooth. Now handset manufacturers such as Nokia and Sony Ericsson (and of course Apple) have shifted the focus to developing devices that are designed to work with computers. Thus mobile phone music playback is going to look pretty much the same as MP3 player usage i.e. the majority of content is going to be from sources other than digital stores.

The other inherent hurdles facing mobile music are well documented (battery life, download speeds, file quality etc.) but they are improving. Nokia and Apple’s focus on WiFi downloading of full quality tracks (rather than the industry norm of dual delivery) is a smart move that dodges the download and quality issues inherent with 2.5 and 3G networks. Nonetheless, mobile music downloading will remain an inferior experience to PC music downloading. Mobile ‘broadband’ speeds will always pale in comparison to PC broadband speeds. Even with WiFi the processing power of mobile handsets means that downloads are significantly slower than to a PC or laptop.

Most crucially, these inherent limitations mean that mobile music will remain a single track dominated business for the midterm future at the very least. The music industry is already close to crisis point with PC digital music with single track downloads accounting for the vast majority of downloads, thus pushing consumers away from buying full albums and thus reducing label revenues and margins. But whereas the industry can realistically try to tackle that trend and drive sales of albums on PC stores, that is prohibitively difficult on mobile.

Thus the more weight of expectation that the record labels place on mobile music to drive digital revenues, the less able they will be to reverse the return-to-singles trend. The risk is that their short-term gain will be at the expense of long-term loss. More consumers may buy more mobile digital music over the next couple of years but those consumers will increasingly rely upon mobile for music buying and in turn become less likely to buy albums. In short, mobile music consumers will buy more digitally, but will spend less on music overall.