Mobile music will thrive on ad support, sponsorship

January 22, 2008

The iTunes music economy is much more sophisticated than the mobile music economy

If the mobile music market is to grow, it has to go beyond single song or ringtone sales toward a model more reliant on advertising and support – just like radio.

That advice, from eMarketer senior analyst John du Pre Gauntt, is key as the music business struggles to survive the impact of the Internet on packaged music sales. It is imperative for music companies to get the mobile channel right, not fighting consumer trends but responding to them. Mobile Marketer’s Lauren Mooney interviewed Mr. Gauntt. Excerpts:

What key trend do you see in mobile music in 2008?
Much more ad-supported. For example, the MySpace and Sprint deal. It will get more sophisticated. The ad-support may not be as sophisticated [now] because of how many places there are to download.

How will 2008 differ from 2007 in mobile music?
Overall, the price plan for mobile music is going down, down, down. The days of $1.99 songs are in the last legs. Sprint supports 99 cents for full downloads. The [price] decline is happening earlier.

What does this mean for marketers?
The mobile music economy will become much more ad-supported, like the present state of radio.

John du Pre Gauntt, eMarketer senior analyst

What other trends do you anticipate in mobile music in 2008?
Mobile music has been sold as an individual song or ringtone. Some of the developments in mobile music in 2008 will be mobile music integrating itself into part of a larger campaign. Not mobile-specific, but have a mobile component.

What were some key developments in mobile music in 2007?
The MySpace and Sprint deal. I still believe that MySpace is mainly a community for discussing music and music lifestyle. The music lifestyle market and the music market are not entirely separate, but they are different.

Who do you anticipate will be key players in this area in 2008?
Apple, Nokia, MySpace, Sprint, Universal.

What challenges do you think mobile music faces in 2008?
The iTunes music economy is much more sophisticated than the mobile music economy. A challenge is to finally get a value chain of carriers and enablers and to get a nearly standardized deal for the Internet music economy.

Is mobile music fully integrated with the other channels?
The music industry fought the digital music industry in a way that wasn’t smart. The global music industry has shrunk 20 percent.

What’s the one thing marketers should do in 2008 in mobile music?
Music marketers need to switch to more ad support and sponsorship. They have got to find more sponsorship-type of deals. They can’t retail their way into saving the music industry.

Other marketers, such as food and beverage marketers, have already proved that sponsorship definitely works. For example, Bacardi started a radio station that plays dance music. Instead of buying radio spots, Bacardi is the radio. Then there’s the Nokia and Universal business deal that is all-you-can-eat mobile music.