Media content and Mobile

Music on Mobile

Most media executives know the Apple iPod and iTunes story well. In 2001 Apple brilliantly created a new market space into what many thought was a diminishing market owned by Sony Walkman on the portable music player side, and in terminal decline due to Napster
on the content side. Apple turned it around, now having sold 100
million iPods in six years and creating a billion dollar revenue stream
for the music recording industry out of legitimate music sales through
iTunes.

What most media executives outside of music do not know, is that the
mobile music industry is actually dramatically larger. Last year alone,
309 million musicphones were sold. The musicphone versions from Nokia,
Motorola, Samsung and SonyEricsson each outsold total iPod shipments
last year. While the growth in iPod sales is down to 40% year-on-year
at under 50 million units, the much larger musicphone market of 309
million was growing at 250% year-on-year. This is the underlying reason
why Apple had to rush the iPhone to the market, the iPod had lived a
beautiful span in music but its reign had come to an end.

The same is true of the music content side. While iTunes delivered
about a billion dollars of music sales revenues in 2006, mobile music
was worth over 8.8 billion dollars worldwide. Three classes of mobile
music - ringing tones, ringback tones, and full-track MP3 songs - each
outsell total iTunes sales on a worldwide basis. In South Korea 45% of
all music sold is sold straight to musicphones; in America less than
10% of all music sold is to iTunes.


Artists First

Artists First, a UK based
firm of musicians turned-technicians that enables artists to create,
package and sell their content directly to mobile users and collect
payment via reverse SMS. After launching in March, the service is live
in over 25 countries. The company is also working on a peer-to-peer
application and developing a range of content-creation tools that will
allow artists to rip a part of their content and deliver it as a
ringtone. The CEO Mark Bjornsgaard says:

“It's all about empowering artists to
communicate directly with their mobile audiences, limiting the role of
the middleman who could get in the way of that exchange and generating
revenue streams from a whole range of income streams over and above the
music.”

Gaming going mobile

Videogaming is the second content category to follow music to mobile
and has already grown bigger than online gaming. The most played
videogame is not Pong or Pac Man or Donkey Kong or Madden’s Pro
Football on a Playstation. The most played videogame worldwide is Snake on Nokia mobile phones.
But games pre-installed to phones do not power the worldwide
videogaming industry any more than Minesweeper and Solitaire
preinstalled onto Microsoft Windows.

The gaming industry makes money on console sales (Playstation 3 and
PSP, Xbox 360, Nintendo Wii), on console game sales, and on networked
games. While most internet games tend to be large format multiplayer
games like CounterStrike, World of Warcraft, Lineage and Everquest, most mobile games tend to be small quizzes, sudoku games, poker etc which are better suited for the smaller screen.

Still multiplayer games are emerging onto mobile as well, such as Disney Studios’ Pirates of the Caribbean,
and Nexgen’s Dwarf battling game Elven Legends. What is
interesting to note is that at 2.5 billion dollars, mobile gaming has
already grown to be larger than internet online gaming in revenues
earned.


More social

As with the internet, interactivity is built into mobile - in fact
SMS text messaging is used by twice as many people worldwide as e-mail,
and through SMS text messaging you can reach three times as many people
as through any messaging platforms on the internet. Because of Metcalfe’s Law (the utility of a communication network grows by the square of the number of network users) and Reed’s Law
(a collaborative network derives even greater benefits than a
communication network), mobile has already become a bigger social
networking platform than the internet.

And a very young mobile content category, the first mobile social networking services went commercial in 2003 as Cyworld Mobile
launched in South Korea. But in only three years, by 2006, mobile
social networking had shot past internet social networking in revenues,
reaching a massive 3.45 billion dollars worldwide, according to
Informa. This is a world record in how rapidly a new billion-dollar
industry has been formed.


Even books going mobile

First books published for mobile phone consumption were released in
Japan in 2002. The early concepts did not work very well. Much like so
many others, the book publishers first tried to copy what worked in
print, take their bestsellers, and release as mobile books. The
concepts failed badly. But experimentation found success. New authors
publish shorter novels to mobile before they have received deals to
publish traditional books.

Those authors who do well, get their works released in book form as
well. The publisher has no risk of printing thousands of books of a
title that won’t sell, then having to resell them at a loss.
Booksellers don’t have to struggle with stocks of obscure titles.
But because of the payment channel inherent in mobile, very low cost
delivery is possible for content which is not heavy in data load -
moving text on the cellular network is not nearly as expensive as
moving images or sounds.

Future prospective authors get more easily published, and publishers
can test with only modest costs, the ability for a given author to find
an audience. In five years mobile books have turned into an 82 million
dollar industry in Japan, or across the whole mobile phone user base,
the average Japanese phone user spend 90 cents per year consuming books
on mobile. When this catches on worldwide, it is another multi-billion
dollar content industry where mobile has cannibalized an older mass
media content format.


After Cyworld opened, I hardly touched MySpace

MySpace is the well known social
networking site with over 100 million users worldwide. Users post
personal profiles, comments, assign indications of who are their online
friends, exchange digital photos, rate music, etc. Cyworld
is a similar social networking site from South Korea but older than
MySpace, and built in the country with the world’s highest
penetration broadband internet and 3G mobile phones, Cyworld has
evolved to become by far more advanced social networking site, and
fully integrated onto both broadband internet and 3G mobile.

Cyworld combines all the innovations of MySpace with the avatars of Second Life, the personal virtual rooms of Habbo Hotel,
the music store of iTunes, the online store of eBay, the video sharing
of YouTube and the full blogging experience (blogs, web logs, personal
diaries and personal publishing online). By every measure, adjusted for
South Korean population size of 50 million inhabitants, Cyworld leads
the world. 42% of the total South Korean population is active inside
Cyworld.

Over 90% of all pictures shared in South Korea go through Cyworld
and for all its immense power of videos shared on YouTube, out of less
than a fourth the size in absolute user numbers, Cyworld actually
generates more video uploading today than YouTube.

Its no longer a question of “should” Coca Cola or Nike or Ford find marketing tools to join social networking sites such as Second Life or MySpace or YouTube.
In Korea every consumer brand HAS to be inside CyWorld. 30,000
businesses including all major consumer brands offer over 500,000 items
of branded digital content for sale already. This is on top of all of
the user-generated content. It truly is a virtual economy eco-system.


Eating the Big Fish

And the internet itself, currently still mostly accessed by personal
computer, is rapidly being cannibalised by mobile phone. Japan became
the first industrialized country where more than half of all internet
access was from mobile in 2005. By 2006 South Korea and Japan joined
this club and in 2006 the internet user migration to mobile of European
countries such as Italy, Germany, Spain, Austria etc was in the 30%
range. 19% of American internet users already use mobile to access the
web. What was technically impossible until this decade, mobile access
to web content is rapidly becoming the preferred choice.

As the majority of internet access migrates from PC to mobile, the
first effect is that all internet content owners start to format their
content with the small screen as the default. Secondly internet content
owners discover the power of mobile money – Japan’s Cybird
was the world’s first internet company that had been unprofitable
on PCs but turned profitable in 2000 due to their mobile internet money
streams, and made the cover of Wired in 2001 for this feat.

After the majority of internet users move from PC to mobile, the
next to follow is usage and traffic, also already observed in Japan in
2006. And the next stage is that new PC shipments start to decline at
the expense of new smartphone sales. This trend too was just observed
in 2006 for the first time in Japan.

But what is important to notice, is that the internet was the most
rapid cannibal new media ever. Now mobile is not only a faster cannibal
of legacy media than the internet; mobile is cannibalizing internet
access itself! That is why Google’s CEO Eric Schmidt keeps repeating his mantra on the future of Google: "Mobile, mobile, mobile!"


This white paper has been originally published with the title "Mobile as the 7th Mass Media: An Evolving Story" by Alan Moore of SMLXL on June 2007. It is available for download on the same site.

Read part 1: Mobile Phones As Mass Media: The Upcoming Technological Revolution - Part 1

About the author

Alan Moore is the originator of the term, philosophy and principles of Engagement Marketing.
He started working on the concept in the late 1990’s, which,
culminated in his founding the first specialist Community Engagement
Marketing company in 2001, SMLXL
(Small Medium Large XtraLarge), and, the writing of the seminal book
Communities Dominate Brands. SMLXL is a new type of marketing company
that helps businesses and customers (to) better engage with one
another. He lectures at Oxford University's short course on Mobile
Social Networking.

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Distributed by Hasan Shrek, independence blogger. Also run online business , matrix, internet marketing solution , online store script .
Beside he is writing some others blogs for notebook computer , computer training , computer software and personal computer

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