Music execs look to cell phones for cash
With sales of CDs on a three-year
slide, the music industry sees mobile phones as powerful outlets for promoting
artists and distributing music for profit -- something it failed to do in the
early days of Internet music-swapping.
In recent months, recording labels have entered deals with wireless carriers and
other companies. The music companies are selling rights to their musicians'
recordings and images for use in screen savers, digital images and song snippets
that are then sold to mobile phone users.
Using text messages
Madonna and other artists already send text messages to cell phones on new
albums or tour dates. Nelly sent similar ones to fans who had submitted their
numbers at concerts.
In June, members of Radiohead plan to reach fans on their mobile phones --
exactly how has yet to be disclosed -- on the same day the band releases its new
record, said Vijay Chattha, spokesman for San Francisco-based IPSH!net, which
developed the promotions.
The recording industry hopes to drive CD sales and, eventually, direct sales of
songs over mobile phones.
That vision remains far from becoming reality, however. The U.S. wireless market
is about two years behind Europe and Asia, and it's not clear how interested
Americans will be in using their phones to buy or listen to music.
"The phone is really still a communications device. It's not a substitute for an
MP3 player or any of those other things," said Jupiter Research analyst Lee
Despite such obstacles, the industry is pushing ahead. Music companies "are
really embracing mobile in a way that has not been seen before," said Ralph
Simon, director of the Mobile Entertainment Forum, a trade association. "They
see it as an important part of the marketing rainbow."
Music industry officials also are optimistic that mobile phone networks will be
less susceptible to rampant pirating seen on the Internet, which the industry
blames for sagging sales.
But while recording companies may be eager to get a foothold in a new medium,
they're also cautious about how much music to free up.
"Until everyone is fully convinced they're not going to be Napsterized in this
space ... (the) attitude is 'Make me some fire and I'll bring you more wood,"'
said Shawn Conahan, president of Los Angeles-based Moviso LLC, which develops
ring tones and other features for wireless devices.
This year's U.S. mobile music market for all content will reach $51 million,
according to Ovum, a London-based consulting firm. It could reach $400 million
to $500 million by 2007, according to Seamus McAteer at the Zelos Group, an
advisory firm in San Francisco.
Analysts and recording executives believe demand for mobile entertainment will
grow as Internet-connected and text messaging-capable handsets become more
common. Now, only 10 percent to 15 percent of the handsets in the United States
are capable of receiving such messages, Simon said.
The top revenue producers for mobile music are downloadable ring tones. Music
fans can buy electronic snippets of popular songs by artists such as Carl
Perkins and Iggy Pop to replace their phones' generic ringer sounds.
Moviso had $15 million in U.S. sales last year and hopes to generate between $40
million and $50 million this year, Conahan said.
But some would-be customers are turned off by the rising costs of mobile
products. Lynn Fernandez, a 22-year-old psychology major at California State
University, Los Angeles, stopped downloading ring tones.
"It used to be 10 cents and they would bill to your cell phone," Fernandez said.
"Now, it's like $1."
Still, the labels see potential.
"At a time when other parts of the music business have been contracting, there's
a high premium on finding new ways to" generate sales, said Paul Vidich,
executive vice president for business development for Warner Music Group.
Warner, part of CNN's parent company AOL Time Warner, has entered trial
agreements with wireless carriers and sold "tens of thousands" of ring tones in
a three- to four-week period, Vidich said.
The draw of ring tones and other content is driven by mobile phone users' desire
to personalize their handsets, said Thomas Gewecke, Sony Music senior vice
president of business development.
Sony has launched a site for AT&T Wireless customers to browse information about
recording artists' tour dates and song releases. Sony is working on providing
clips by phone of original recordings of songs, images and animations.
"Ring tones are today's business," Vidich said, "and the downloads are