Received via e-mail from J. Gerry Purdy, VP & Chief Analyst of Frost & Sullivan.
Mobile Music: Why Can’t We All Just Get Along?
May 2008 Mobile music is finally becoming pervasive through the use of MP3 players. Just look at any park where people congregate and jog/walk. You’ll see lots of people listening to an iPod or iPhone while they work out. Apple just reported they sold 10.6 million iPods and 1.7 million iPhones in the last quarter. Music lovers are striving to make the music they love a part of their day, wherever life takes them.
But wait, how come you can’t listen to a ‘radio station’ on iTunes (on a PC) or on your iPod? Just go to Yahoo!Music, Rhapsody (RealNetworks), or XM Radio, or SIRIUS. They all have really great channels of music that are streamed to your PC or to your wireless portable device. But, due to digital rights management (DRM) political issues, none of them can stream to an iPod or iPhone. Crazy isn’t it?
Here’s what I see happening in the mobile music industry and what I think should be done to make it a better, more viable, and profitable industry for everyone.
In Figure 1, I have summarized the different forms of music programming that are available to PC and mobile devices: 1) streaming channels, 2) on demand subscription services, 3) online downloads/purchases, and 4) CD. For example, you can play any one of a number of Rhapsody music channels, from country to golden oldies. But when you look at the ‘Rhapsody to Go’ link and select Apple, no compatible products are shown. That’s crazy.
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Now, go to Apple iTunes. You can search and find any one of 500,000 or more songs and albums. But there are not any channels to which you can subscribe and stream music to either a PC or wirelessly to an iPod touch or iPhone. That’s crazier. Other music programming includes taking a CD and ‘ripping’ it into MP3 or other digital format, which can then be played on your PC or portable music player, such as the iPod. And Rhapsody, which recently partnered with Yahoo!Music to extend its service to an entirely new music-seeking audience, has excellent online programming, along with an ability to find and download (a limited number of) songs.
If you look at the content of most iPod devices, I would estimate that over 90% of the music that is located on these devices is music that their owners have ripped from their own personal collection of CDs. They create playlists and simply listen to their CDs while mobile. Sure beats carrying around a CD player! Downloads can be transferred from PC to mobile devices, but not to Apple devices.
Apple reported that 4 billion songs have been purchased from iTunes. Users who have an iPod and don’t want to interact with other music sites are fine with the Apple iTunes songs. But if you changed to, say, a Microsoft Zune or SanDisk Stanza, the music you purchased from iTunes will not work on your other devices (even if you purchased the song without DRM). That’s because Apple uses a different music format (AAC) than the other devices. The iPod and iPhone will play most open music formats, such as MP3, WAV, and WMF, but other portable music players can’t play AAC. This is summarized in Figure 2. This figure provides a comparison between iTunes (iPod & iPhone) vs. the streaming sites. On top of this, you have the different DRM issues and platforms, like Microsoft’s Sure Play initiative, to make it all even more complex (since, for example, you cannot use Sure Play on iPods and iPhones). Even crazier still!
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Figure 3 demonstrates what should be already in place but, sadly, is still a visionary diagram. There’s really no reason (other than politics and money) that owners of music content can’t work with digital distributors to allow access by any desired method and then send the music to the portable device, either via streaming or side loading. The only reason this diagram hasn’t become a reality is due to politics (who gets what share of the money) and a tremendous pirating process that exists on the Internet.
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There is a new initiative called Total Music being promoted by Doug Morris, CEO of Universal Music, along with Sony BMG, Warner Music Group and MCA, which together control over 80% of the music sold in the US. Their idea: get carriers and device makers to pay $5 per month for an ‘all you can eat’ subscription. There may be anti-competition issues that the US Dept of Justice might see as ‘price fixing.’ What really needs to happen is for musicians to get a fair royalty for their music as it moves through the food chain shown in Figure 3. Instead, those on the right tend to want to control the ecosystem all the way back to the left instead of the other way around! That’s the most crazy of all!
It seems so simple and straight forward to build a viable mobile music economy. Perhaps all the interested parties should sit down and work out an acceptable split of the revenue so that billions of customers can access any music via any method on any devices. Nirvana? Perhaps, but I hope it really will happen someday soon.
In My Humble Opinion (IMHO):
NetFlix and TiVo should form a strategic alliance so that users could select a movie on NetFlix (great movie library and searching functions) and simply designate to have it delivered over the internet to their TiVo (great TV DVR user experience). Both companies need to think of the user experience and not try to dominate the other company. It should only take 10 min between the two CEOs to strike a deal that would be synergistic for everyone.
Written by:
J. Gerry Purdy, Ph.D.
VP & Chief Analyst
Mobile & Wireless
Frost & Sullivan
Keywords: Frost & Sullivan, Inside Mobile and Wireless, Mobile & Wireless, Mobile Music, mobile 2.0, Gerry Purdy
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