Posts Tagged ‘ spotify ’

Consumer doesn’t want to pay for mobile music

A few months ago, we discussed how mobile music is evolving from ring tones to new music services.   However, it’s not easy to find the right model to generate revenue in this market.

In September, the iPhone app Spotify was launched to the Apple app store, allowing users to access music playlists on their phone as part of the £9.99 ad-free monthly subscription.  However, the reactions were very mixed.  From the 1800 consumer reviews on the first day of the launch, there were 400 people giving the maximum of 5 stars, but no less than 1100 giving it only one star.
According to a survey among readers of the British website nma.co.uk, 2 out of 3 is not willing to pay for streaming music. 

Mark Mulligan, VP and research director at Forrester Research, said the mobile music market is a tough challenge and no one has yet cracked it. “Consumers have generally said they have no appetite for paying for streaming music and there’s endless evidence that they won’t buy music they don’t own. So realistically, for Spotify, the aspiration should be to convert a small number of people to premium via the mobile app,” he said.

But a Spotify spokesman told NewMediaAge the company wasn’t surprised by consumers’ responses to the app. “We always knew the majority of users would stay on the free service,” he said. “We’re getting a lot of traffic from people used to free illegal downloads, so they expect us to be free. We’ve only launched on the iPhone and Android for now, so that’s just a small percentage of the market, although we’re confident a fair number will upgrade.”

Meanwhile, Napster, the illegal-gone-legal music service has reacted to the Spotify launch by halving the price of its streaming service to £5 a month. 

Who will win this competition?  Or will consumers stick to their illegal downloads, still found everywhere online…?

Trip with Medianet day 1 – Ericsson, SVT

Medianet Vlaanderen organizes for the first time a study trip. I have the honour to join a select number of participants on behalf of MobileWeb and as a member of the board of the IAB. The trip will bring us to Sweden and Finland in an ambitious program.

Yesterday evening we received from TS (a media measurement company) a good overview of the Swedish advertising market. There are basically 3 main conclusions:

  • The market is extremely fragmented (there are eg more than 400 magazines)
  • Swedes love newspapers and newspapers attract most of the advertising pie (25%)
  • Internet investment (13%) is higher than TV advertising

With about 4 million euro investment in mobile advertising, this platform is only picking up.

This morning we have been received in a very professional manner by the people of Ericsson in their headquarters building. After going through the history of advertising, we have received a broad view on the future of telecommunications as Ericsson sees it.

first mobile phone (1956)

first mobile phone (1956)

history of phones at Ericsson

history of phones at Ericsson

Main take-aways of the many presentations and demonstrations:

  • Mobile is going broadband in the next 5 years thanks to technologies like HSPA and LTE (long term evolution): Ericsson expects there will be many more mobile broadband subscribers than  fixed line broadband subscribers in the years to come
  • New applications will emerge: eg disaster alerts, software push distribution, mobile video
  • Ericsson firmly believes in MBMS (broadcasting via existing base stations), much less in DVB-H because the latter requires the deployment of a entirely new network of antennas; watch more MBMS devices  to come in the near future
  • Mobile broadband speed will in the near term reach 20 – 100Mbit/sec which is largely sufficient for HD video distribution
  • Most mobile broadband penetration is reached in countries where operators offer unlimited access at a flat rate fee (eg 20 EUR offered by operator 3 in Sweden)
  • Consumer research indicates that the main use of the internet is more and more shifting from information sharing (publisher to user) to communications between people in a large variety of ways
mbms enters the scene in mobile broadband

mbms enters the scene in mobile broadband

We also learned more about the vision and strategy of Ericsson in the area of IPTV, where there is a convergence towards the Open IPTV framework and IMS technologies. Ericsson is also developing its backoffice applications further on the core Tandberg platform it acquired some time ago.

In the afternoon we visited Sveriges Television, the Swedish public broadcaster.

Sveriges Television (SVT)

Sveriges Television (SVT)

We  learned about the technological challenges of handling large amounts of digital video files and got a nice insight into some of the most recent webinitiatives like Open Newsroom and playrapport.se. The latter project is a website which contains only video news items. It is updated several times per day at this moment by 1 editor and 1 anchor.

We also had the pleasure to assist to the 16h live news edition in the middle of the newsroom!

live news broadcast at SVT

live news broadcast at SVT

We had dinner in a restaurant in the nice old part of Stockholm where we met with people from the media and Internet sector. The chairwoman of the recently established local  IAB Sweden organisation explained amongst others that the 4 mobile operators have introduced since october 1st a “mobile reach” package in which they combine their full reach on their mobile portals (2 mio unique visitors per month). Adidas is  the first advertiser who has signed up.  Another interesting participant was the “ombudswoman” of advertising practices. She has the challenge of setting up a dialogue between the consumer and the advertisers about which levels of advertising are acceptable. There has been recently quite a lot of problems with an advertising campaign of Ryan Air which was misusing attractive female pictures for a new offer. This provided sufficient food for discussion in the group! 

Tomorrow we are heading towards Finland, very early in the morning.

PS: one company to discover: www.spotify.com, offering live music streaming for an amazing wide range of artists and numbers; this has been recently launched in the Swedish market at flat rate of 10 EUR per month. It will definitely challenge the model of online music distribution and make the iTunes of this world re-think their strategy. A similar technology has been developed by One Agency: www.tunify.com .