Last month this space was concerned with the complicated nature of content licensing for pay-TV services, which is why IPTV operators can't put together specialized program channels as easily as one might think. However, if you think negotiating content deals for a pay-TV service is a hard dollar, try starting an online music service.
Motorola did - in China. It's called MotoMusic.com.cn, it has 10,000 tracks on it, and Motorola had to license each and every one of them. To hear Ian Chapman-Banks (VP of Motorola Asia Pacific, as well as its North Asia GM of marketing and business development for mobile devices) tell it, the negotiations could take as long as a month to get the rights clearance for one song.
Chapman-Banks allows that one reason it took so long was Motorola's inexperience with the inner machinery of the music business. Even so, that same complexity awaits any service provider thinking of offering music content.
And they are. Music is expected to be a significant driver of digital content in the next five years, especially for mobile networks. Music-enabled handsets will outsell digital audio players in a few years time. Meanwhile, CD sales are shrinking almost 5% a year. Digital music is already outselling physical CD sales in Korea and China. Mobile downloads account for 10% of digital music sales worldwide. In Japan, it's 96%.
Hence the rash of music-oriented handsets hitting the market, from Sony Ericsson's Walkman phones to Motorola's new ROKR E2.
The mobile industry is clearly ready for digital music. It remains to be seen whether the music industry is.
Call that easy‾
The music licensing regime arguably isn't. One song comes with a multitude of licenses for performance rights, broadcast, reproduction, etc, and the rights can be held by multiple licensing societies, as well the producers and musicians. For example, the song 'Celebration' by Kool And The Gang reportedly has 17 license-holders - all of which must approve a request by, say, Motorola to offer the song on its digital download service.
It's far from clear whether the music industry will create a simpler licensing scheme to facilitate digital music. In any case, licensing isn't the only element that's user-unfriendly. The use of DRM and copy-control software remains a controversial point that pits a legitimate need to protect copyright against a limited user experience. Many an executive at a recent music industry conference in Hong Kong espoused the need for ease-of-use in digital music services and focusing on what the consumer wants. However, if mobile music apps espoused by Nokia and Motorola are anything to go by, consumers are demanding music downloads that only play on the handset they downloaded it to, and can't be transferred to a new handset unless they pay for the song again. And because consumers love to share music, they're also demanding a sharing function that allows them to transfer tracks to their friends' handsets (provided they have compatible media players), after which the friend must pay the service provider to unlock the DRM key.
Who knows‾ That may be exactly what music fans want. Or at least what they'll settle for. Few music consumers would buy CDs if buying a new hi-fi system would instantly render their entire music collection obsolete unless they bought all new copies.
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