Mobile Technology: Music On The Move

By Will Morgan

The mobile industry, as it pertains to music retail, is a very difficult one to define. Booming growth would arguably be a safe categorization, as would the fact that it has been largely dominated by major-label artists. But even here there exists some confusion, as certain shifts in consumer behavior are altering the industry’s make-up. As an example, in January, The Orchard, a large digital distributor of independent music, inked an agreement with Ericsson to offer the telecom giant’s mobile music partners a deeper catalog of ringtones and the like. A similar contract had been reached earlier between The Orchard and Verizon Wireless. Of the two deals, DigitalMusicNews.com noted “both will give consumers far broader access to niche content, though a heavy percentage of mobile music activity is decidedly not Long Tail,” referring to Chris Anderson’s Long Tail theory forecasting an increased demand for niche markets. “Ringtone charts are dominated by popular rap artists,“ continued the article.

News of independent artists gaining access to a mobile company as far-reaching as Ericsson certainly seems worthy of celebration. But considering, as the article rightly indicates, that ringtones are a more potent revenue source for certain genres and artists, is the deal truly a beneficial one for independent artists? The Long Tail theory addresses this issue. Anderson, in explaining his logic on his blog (www.thelongtail.com), states, “one example of [the increasing interest for niche markets] is the theory’s prediction that demand for products not available in traditional brick-and-mortar stores is potentially as big as for those that are...The potential aggregate size of the many small markets in goods that don’t individually sell well enough for traditional retail and broadcast distribution may someday rival that of the existing large market in goods that do cross that economic bar.” In this light, independent artists are better off maintaining their unique underground appeal rather than attempting to break into a larger sector already thriving without them. And for all those musicians who have held their ground, Anderson’s concept has now produced results. Through what Broadtexter (www.broadtexter.com) founder Teddy Goldstein qualifies as a “very viral, very organic” series of consumer trends, mobile technology has spawned a marketplace for independent content. As John Manning, chief marketing officer for Phone Sherpa (www.phonesherpa.com), states, “We’re seeing the Long Tail in our customer base.”

THE NEXT MOVEMENT
“Exclusivity arrangements between distribution companies and mobile carriers have put huge restrictions on what content consumers can access on their phones, and every day we read about a label making an exclusive deal with a major mobile phone carrier to offer their content to subscribers,” explains Myk Willis, the founder of MyxerTones (www.myxertones.com). “It’s still very much a closed network, and both consumers and content providers are not given open access.” Todd McGee, CEO for Groupietunes (www.groupietunes.com), emphasizes that current mobile distribution systems are cost prohibitive, offering musicians on a budget or without major label support little in the way of sales. It is in establishing a route around these restrictive mobile clauses that DIY-minded mobile technology companies have managed to set off a space where independent artists can thrive in an otherwise oppressive business climate.

The mobile technology sector is fundamentally akin to other popular communication forms today. And like any burgeoning trend, there are pacesetters — those companies that have identified the opportunity and created the channels through which others can exploit the craze. Their model for success relies on many of the same offerings as the MySpaces of the world: an interface, a revenue stream, and, above all, a promotions platform. “Small, independent artists are able to promote themselves through web and mobile technologies for a tiny cost,” says Annabel Youens, community developer for Voeveo (www.voeveo.com). “The playing field is evening out.”

THE INTERFACE
Like MySpace, mobile technology services provide a cost-efficient framework through which to distribute music. “Mobile technology opens the mobile industry to everyone by providing artists with complete control over promotion, pricing, and distribution of their content into the mobile channel,” says Lenora Collins, communications manager for Phone Sherpa. Now, artists can upload one of their own songs, splice a 30-second section from it, price it and place it in a secure storefront for sale as a ringtone in a matter of minutes. The same can be done for wallpaper and full track downloads. Even more beneficial is the fact that all the backend services are taken care of up front — “aboveboard,” as Collins describes it. “The idea is to build a product and service that would be able to guide people through the terrain of mobile content — an easier, secure option,” Collins continues. Phone Sherpa, for instance, offers a safe, completely self-contained flash widget where fans can buy content in a few steps without being redirected.

A primary enabler for this level of service is copyright ownership. Because a large majority of unsigned and independent artists still have complete control over their own content, mobile technology services are able to eliminate the barricaded entry points, the exclusivity contracts, and the lack of ownership retention. Instead, attention is placed on giving independent artists “the toolset,” as McGee calls it, to deliver their music to a larger audience. Included in Groupietunes’ toolset is the “moblog” (mobile blog) feature, through which artists or fans can send pictures and text to their Groupietunes page blog from their phone.

“If we are just a function, if we strip away what these backend companies are doing with the major labels, we can be more successful,” says Goldstein. “Independent artists are just trying to get eight more people to their show.” Goldstein goes on to compare the format mobile technology services follow to that offered by Derek Sivers’ CD Baby: “just make it useful just for what the artist wants,” he says.

This level of transparency is paramount for mobile technology services. Not only do artists appreciate this sign of trust, but, as Youens points out, it can be an effective lure for fans as well. “We attract buyers because they can see exactly who made the mobile content they’re buying, plus our prices are clearly listed on the site,” she says, reinforcing the fact that fans are drawn to services that allow them to know exactly who is benefiting from their purchase — the content generator (i.e. the artist). CD Baby clearly sees the logic in this model, having just confirmed a deal with Voeveo to distribute its independent content worldwide to mobile users.

THE REVENUE STREAM
As is the case with any cost-efficient internet distribution and promotion platform, the revenues generated by mobile technology services are often not of debt-reducing scale, but they do fulfill a very obvious niche — that of fan demand for unique content. As Manning explains the trend, “the indie artist is catering to a younger generation that will grab on to one song that helps them stand out or fit in.” Of course, once one fan has a custom ringtone, wallpaper, or full track on their phone, word-of-mouth can easily take hold, increasing the overall value of the offering. “Savvy users will always be looking for unique content from original artists,” confirms Youens. Additionally, the mobility of mobile phones cannot be overemphasized. These young generations to which Manning is referring are particularly prone to impulse purchases, and as such, mobile technology stands as the most immediate provider of on-demand content. MyxerTones’ MyxerCodes functionality, for instance, allows fans to buy their favorite artist’s songs via SMS (text messaging). And, in most cases, the charge will show up on the fan’s monthly phone bill as with any other standard mobile purchase. Again, artists benefit from the fluidity of the interface provided by mobile technology pacesetters.

Artists can also profit from understanding the demands of the market and where their efforts can best be focused to maximize revenue. Manning emphasizes the importance of real-time sales support, and “being able to find out what that 20 percent [of your top-selling content] is and pushing that to front.” Artists are greatly empowered when they can anticipate the buying behavior or their audience. They would also be wise, as Willis denotes, to exploit mobile technology’s communicative abilities and the relation it allows with fans. “While we certainly have some artists who are making meaningful profits month-to-month from their ringtone sales, the biggest benefit for indies is the ability to connect with their fans on a really personal level,” says Willis. “Mobile phones are really personal devices, and being able to interact via text messaging or with custom ringtones really creates a great bond with fans.” The point to absorb here is that mobile technology has excellent DIY potential by providing artists and fans with another unique and personal form of communication, an advantage that should be utilized and built upon. But, as Willis hints at here, the line between generating revenue and exercising networks has grown increasingly blurred.

“Music is becoming more and more of a commodity,” says McGee, a longtime musician himself. “If you look at it from an industry-wide standpoint, revenues are increasing in touring and merch. If you take the mindset that music is there to promote in order to sell other things, there’s a viral capability. That has more effect long-term.” McGee’s point applies to all existing modes of DIY promotion. Social networking, online distribution, blogging, and now mobile technology sites and services — each are devoted to creating buzz rather than money.

THE PROMOTIONS PLATFORM
The growth in mobile technology has enabled companies to develop online tools, such as widgets and automated text messaging, that remove the middlemen and let independent musicians simply market themselves from a grassroots level. With the use of widgets, artists can drop mobile storefronts and service sign-ups on any website that allows HTML editing (blogs, social networking sites, etc.), thereby drastically increasing their selling and promotions potential.

Artists can also save on their own phone costs by utilizing services that allow for text message blasts to reach fans within a specific region or on the day of the show. Or try using Broadtexter’s new scheduled sends feature, whereby you can set regionalized text messages to fit your entire tour schedule, and have them be sent automatically when you hit each city. Here again, artists are able to take advantage of the mobile phone’s portability: “Why not send updates directly to [your fans], especially on the weekends when they only get back to their computer in the morning,” Goldstein points out.

But perhaps mobile technology’s greatest role in artist promotions is its lack of a role. These mobile pacesetters recognize the significance placed on a consistent and comprehensive marketing approach, and giving musicians the ability to control their online presence is consistent with DIY modes of operation. As Manning notes, “[Independent artists] don’t need mass marketing — it’s the ability to share information outside of a mass media” that enables them to succeed. Goldstein echoes his comments, affirming “We don’t do marketing to your fans; we’re giving you the platform to connect to them. We think of ourselves as a solution.” In the end, mobile technology services do not tamper with artists’ promotional efforts — they merely enhance their reach and effectiveness. “Ultimately, what we’re trying to do is education — educating the artists on how to bring in fans,” says McGee. “You’ve got to let your fans know about it. You have to be proactive. Its not just about downloads.”

THE FUTURE
Today, the number of music-enabled mobile phones sold is roughly twice as much as the number of mp3 players sold. Now couple this fact with the estimation by Gartner Inc. that mobile phone users internationally will spend $32.2 billion on music downloaded through handsets by 2010, a hefty increase from the $13.7 billion expected to be spent this year. This rampant mobile purchasing accounts for roughly 40% of record company digital revenues, according to the IFPI. Says Manning, “New [mobile] stores are being created by indie record labels — the center of competence for marketing techniques.”

The numbers paint a very apparent picture: the market is primed for an infusion of content from independent musicians, on their own terms and by their own methods. And with the mobile industry’s extraordinary growth, there is very little risk for the bottom falling out. Youens qualifies the trend well: “In 10 years...consumers will view their mobile phones as much more than just a way to communicate. Your mobile phone will be your musical player, your wallet, your instant messenger, your personal organizer, basically your digital way to connect with the world.”

Browse to www.groupietunes.com and search “performermag” to see the service’s moblog (mobile blog) feature in action at our offices.