Monday, October 09, 2006

Death of the Ringtone - MoCoNews

» The Death Of The Ringtone
Related Topics: Mobile Music, Research, UK -- Permalink - Comments (1) [by jemima]

Dodgy sales techniques, piracy and full-track downloads are all being blamed as the bottom falls out of the ringtone market. Research by MusicAlly tracks UK ringtone sales growing from £34.8 million in 2000 to £177.3 in 2005, but predicts that will fall to £143.5 million this year and £78.8 million by 2007.
It's quite understandable though: the kids don't see the point in paying £3.50 for a tinny 10-second ringtone interpretation of a new song when they can often copy the full MP3 onto their phone and set that as their ringtone. That's not always done legally though - this piece says younger phone users are using their phones to record music on their computers or are Bluetoothing tracks from friends. There's also software floating online that converts MP3s to ringtones.

Misleading sales subscriptions are also a factor because users often don't trust ringtone services.
M:Metrics data for Europe shows a 42 percent drop in sales, part of what senior analyst Paul Goode described as a significant shift for the ringtone market: "As mastertones supersede polyphonic tones, and short codes gain steam as a merchandising vehicle, the economics of the business will have to change. The availability of tools to make user-created ringtones more accessible to the masses poses an even greater threat to companies who can offer no additional value to a consumer who buys a ringtone in lieu of making one themselves."

Related: UK Leads In Mobile Music Consumption, US In Ringtones
Mobile TV Now More Successful Than Ringtones -- Vodafone

SonyBMG on Mobile Music - MoCoNews

» Sony BMG Bullish On Mobile Music
Related Topics: Mobile Music, Research, SonyBMG -- Permalink - Comments (0) [by james]

A couple of interesting points about digital music as part of Sony BMG's's currently around 20% but "that percentage should rise "significantly" when someone figures out how to make platforms interoperable. Hesse expects digital revenue to rise between 50 percent and 60 percent in 2006?.
On the mobile side: "On average, 4.1 million, or 2.1 percent of the 190 million U.S. cellular subscribers, used their mobile phone as a music player in August, according to M:Metrics Inc. The research firm estimates that number slides in Europe to 649,490."
Related stories:
UK Leads In Mobile Music Consumption, US In Ringtones

Microsoft Points on Seeking Alpha

Microsoft's Latest Marketing Scheme: Pinching Pennies Off the Customer

Largely unnoticed in the pricing announcement last week was this little tidbit about how consumers might pay for Zune music. CNET had a pretty decent description in their article, where they accurately noted that Microsoft's real play is to get people to buy subscriptions for $14.99 a month. But if pressed, they'll generously allow people to buy individual songs. But you can forget one-click buying; Microsoft (MSFT) has a cuter idea:

There will also be the option of purchasing individual songs through a system called Microsoft Points. The new Microsoft cash system will work by adding money to an account, as with a prepaid phone card. Points will then be deducted from the account with each purchase. A single song will cost 79 points, "the equivalent of 99 cents," according to Microsoft spokeswoman Kyrsa Dixon.

The point system is already used in the Xbox Live Marketplace, and Microsoft plans to host other online stores where Microsoft points can be redeemed, according to Katy Gentes, product marketing manager for Zune. In the United States, points are available in denominations of $5 for 400 points, $15 for 1,200, $25 for 2,000 and $50 for 4,000. That makes $1 worth about 80 points.

Now from a marketing point of view, there are two marketing tricks going on here. First is the concept of not having 100 points equal a dollar. That would be too simple and easy to understand. Instead, Microsoft sets the song price to 79 points, which most people will perceive as being inexpensive because it is less than 99. Cute, very cute.

The second marketing trick is the use of a new form of currency; yes, Microsoft money has finally arrived, and it has all the charm of an end user licensing agreement -- and just as many tricky parts. Note the denominations offered above and think about this common transaction: buying your average, garden-variety album for $9.99. You'll need probably 799 points to buy that. But notice that there's no 800 point denomination. Microsoft is betting that most consumers won't buy two 400 point packs, but will instead opt for purchasing 1,200 points for $15, and will leave the extra 400 points on account with Microsoft. So consumers end up either 1) doing extra work to pay exactly the right amount (i.e., going to the store, purchasing two 400 point packs, returning to the music purchase and then buying their album), or 2) provide an interest free loan to a company that has $40 billion in the bank. Cute, too cute by half.

Microsoft seems to take particular glee in making consumers work harder than necessary to buy their products and grabbing every fraction of a penny they can squeeze out of the transaction. If the company spent half as much effort investing in, say, making a truly elegant hardware device (instead of just re-badging someone else's) and making the user experience simple and hassle-free with one-click credit card payment (it worked for Amazon (AMZN), didn't it?), they'd probably make more money in the end than pinching pennies with tricky pricing and proprietary money schemes.

Someone once said that the lottery is a tax on people who are bad at math. Maybe Microsoft intends Zune Marketplace to be a tax on people who like marketing tricks. It might work, but it's no way to build customer loyalty.

Full disclosure: I own shares of Apple Computer.

PayPal in court

Making PayPal Your Friend

Ron Lieber writes for the Wall St. Journal about PayPal and some recent changes following settlement of complaints brought by 28 state attorneys general. Lieber recommends not funding PayPal transactions directly from your bank account account but, rather, using either a debit card linked to your checking account or selecting the credit card option each time you use PayPal.

Friday, October 06, 2006

Valista survey on Operator's cut

Everyone in the content game knows that the mobile industry’s biggest bugbear is the large slice of revenues that network operators take. Now its official. Research carried out last week at Mobile Content World in London of the exhibitiors and delegates found that more than half of respondents correctly answered that mobile operators currently take 40 to 50 per cent of mobile content transactions. However, less than six per cent believe this will be the case in three years time. In fact almost two-thirds of those questioned believe that in three years' time, mobile operators should cut their share by at least half — to less than 20 per cent, with 18 per cent of respondents believing that they should take only five per cent.

The study, carried out by Valista a leading, independent provider of merchandising, payments and settlement solutions, finds that what is clear is that in order to safeguard revenues, the industry needs to drive the uptake of mobile content through creative and flexible pricing, content bundling and promotions and cleverly targeted content.

More than 28 per cent of delegates surveyed believe that targeting content by demographic groups and communities will be the most likely way to increase content purchasing, closely followed by flexible pricing (27%) and improved mobile search (20%).

According to Arlene Adams, Vice President at Valista who attended the Mobile Content World show yesterday, "Currently, operators take the greatest share of mobile content revenue, but the distribution of power could shift - particularly when the major media moguls secure their foothold in the marketplace.

Consolidation and the entrance of major consumer brands will shape the future value chain, and operators need to balance recouping revenues with the desire to maximise their share in the long run. In this regard, operators need to look at more innovative merchandising and marketing tools to encourage their consumers to buy more. In addition, a payments model which lowers or eliminates revenue leakage and allows end-to-end traceability for transactions and the parties involved, will allow operators to look at lowering their fees while encouraging growth in the content market."

Good news for the industry came in the finding that mobile TV and Video downloads will be the most popular forms of content over the next few years, an opinion that mirrors recent analyst predictions. Broadcasting rich content will see a move from lower value payments (micro-payments) to higher value transactions (macro-payments). In this regard, operators need to protect their brand and look at personalised and compelling content to grow Average Revenue Per User (ARPU) and drive off competition from more traditional payment schemes. Less positive for operators was the finding that only 15 per cent of content purchased will be part of an ongoing subscription model.

What may make uncomfortable reading is the fact that, according to attendees, mobile operators will not see content purchases making up for falling revenues. More than half of those who contributed (58%) believe that in three years' time, less than 25 per cent of total operator revenue will come from mobile content and 15 per cent believe that it might drop as low as 10 per cent. This figure is interesting given that mobile content and entertainment services market accounted for less than four per cent of total mobile service revenue and less than 19 per cent of non-voice revenue in 2005 according to research firm, Analysys. Another figure quoted by iGillott Research predicts that mobile content will account for 40 per cent of operators' revenue by 2009.

Despite the variations in the predictions above, those questioned in the Valista poll were in agreement on the future of mobile payments, with more than 65 per cent believing that the current system of paying for mobile content via Premium SMS will, in the next few years, give way to more flexible and robust payment methods such as paying via the monthly bill (direct-to-bill charging).

M Metrics data on UK mobile consumption

Today's Payments News

Mobile Contactless Payments - $36 Billion In Payments By 2011

Strategy Analytics has released “Mobile Contactless Payments –Growth on the Horizon,” analyzing payment for goods or services using phones instead of cash or credit/ debit cards. According to the company, "the report concludes that the conditions are finally right for growth over the next five years, projecting that mobile contactless payment will be used to drive sales of $36 billion by 2011."

Will Contactless Payment Cards Connect In The U.S.?

Bankrate's Gregory Taggart reports on the growth in contactless card usage in the US - highlighting Visa data showing that "contactless transactions are an average of 25 percent faster than cash" and claiming that the contactless roll-out in the US has been the fastest deployment of new payment technology ever.

UK: HSBC Rings In Mobile Banking

Richard Wray reports for The Guardian about HSBC's launch today of a new mobile banking service that will allow customers to "use their mobile phone to check their bank balance or help their friends or family pay for calls." According to Wray, "after downloading a simple piece of software to their phone, the bank's customers will be able to check their balance or find out if they have been paid, wherever they are."

Thursday, October 05, 2006

Youth & Texting - from 160 Characters

News: U TXTING 2 ME?

Submitted by Mike Grenville on Thu, 28 Sep 2006 17:40

An online debate by Spiked that is looking at the impact that mobile phones are having on young people is inviting contributions.

Whether texting, talking or being tracked by worried parents, young people live in a mobile-connected world. How are new technologies re-shaping the boundaries between childhood and adulthood? And who should set the boundaries - teenagers, parents, governments or companies?

The debate is hosted by independent online debating group spiked and sponsored by O2.

To start the debate off, four pieces have been published:
  • ED MAYO, chief executive of the National Consumer Council, argues that 'the views of young people need to be taken into account - they're often far more sophisticated than the regulator's': The boundaries to protection
  • JENNIE BRISTOW, former commisioning editor of spiked and freelance writer, argues that 'parenting is full of challenges but clamping down on children's attempts to use mobiles would be a mistake'. Children should be allowed their freedom
  • JOHN CARR, chair of the UK's Children's Charities' Coalition on Internet Safety, argues that 'we all have to take responsibility for child protection'. There is no monopoly of concern
  • JONNY SHIPP, head of content control at O2, argues that 'kids may be inexperienced in life but they're streets ahead of their parents in realizing the creative and social possibilities of mobiles'. Safety in social networking

The debate is open for contributions here:

Wednesday, October 04, 2006

Mobile banking UK - Payment News

HSBC, First Direct launch mobile banking

HSBC and First Direct are going live with their mobile banking service in the U.K. today, which runs over GPRS and is available to 02, Vodafone, Orange, T-Mobile, Virgin and Tesco subscribers. The new service enables users to access their bank accounts for mini-statements, balance inquiries and to top off their phone accounts. The companies say the service will result in a cost savings for the users because it will save them on ATM fees from rival banks.

For more on the mobile banking service:
- see this article from VNUnet

Tuesday, October 03, 2006

Bitpass on Payments News

Bitpass Unveils Next-Generation Digital Commerce Engine

Bitpass has announced its next-generation digital commerce engine, which the company says "allows merchants, publishers, marketers and consumers to fully capitalize on digital content."

Norway: BankID for Mobile Phones

Norway: BankID for Mobile Phones

Telenor and the Norwegian banking industry have announced they have entered into a "unique agreement to make life simpler for millions of Norwegians by making banking and payment services available via a mobile phone, anytime and anywhere."

"Technologically, banks in Norway are among the world leaders, and the extensive cooperation in the industry has resulted in much simpler banking for customers. Another step in this direction is BankID for mobile phones, with Telenor as partner. The partnership will have enormous consequences for bank customers in the future," says Arne Hyttnes, Managing Director of the Norwegian Savings Banks Association.

The Norwegian banking industry, through the Norwegian Savings Banks Association and the Norwegian Financial Services Association (FNH), is behind the BankID Partnership (BankID Samarbeidet). The BankID Partnership has developed BankID, an electronic proof of identity which can be used for identification and signing agreements on the Internet.

BankID for mobile phones builds on the cooperative model in the BankID Partnership. The agreement between Telenor and the BankID Partnership is unique as there is no equivalent cooperation between the banking industry and the telecommunication sector in other countries.

"With BankID for mobile phones, we are helping simplify our customers' lives, while at the same time participating in a unique and innovative partnership with the banking industry," says Berit Kjoell, Division director in Telenor.

BankID for mobile phones strengthens BankID's position as the most widespread and widely used electronic proof of identity. Telenor is the first operator to enter into an agreement with the BankID Partnership, but this does not exclude other operators from signing a similar agreement.

BankID for mobile phones will be available in 2008 and all banks participating in the BankID Partnership may offer BankID to their customers. When that happens, 2.3 million Internet bank customers and 2.7 million Telenor subscribers will be able to identify themselves and sign agreements using a mobile phone. This means that customers decide the bank's opening times and have access to new services they need -- secure services, anytime and anywhere.

"The financial industry is at the forefront of using modern and cost-effective solutions to the benefit of people in general. BankID for mobile phones can help meet people's expectation of being able to satisfy their banking needs anytime and anywhere. Having to stand in line to pay bills is ancient history," says Arne Skauge, Managing Director of FNH.

Usage of mobile phones has gone beyond speech and SMS to areas such as MMS and the Internet. BankID for mobile phones is a natural part of this development, and will initially be used in four areas: logging on to Internet banks, mobile banking, electronic service for business and the public sector, and account-based payment services for the Internet and mobiles (BankAxess).

The BankID Partnership was set up by the Norwegian Financial Services Association (FNH) and the Norwegian Savings Banks Association to develop and coordinate infrastructure for the entire banking industry. The banks participate directly in the BankID Partnership through projects and involvement in working groups. Each bank issues BankID and supplies the market with accompanying services.