Music Subscriptions wherefore art thou?

With paid music downloads falling far short of offsetting the impact of declining CD sales, next generation subscription services need to succeed if recorded music sales are ever going to come out of their nose dive.  There is certainly lots of supply side activity, with services launched or announced in the last year from, Nokia, Spotify, TDC, Sky, Virgin Media to name but a few. And the incumbents have been busy reworking their offerings (cf Napster’s new 50%-price-cut-with-MP3s play).

 

Music subscription services have a lot of history but not a huge amount of success, so what gives the current new crop any chance of survival, let alone success?  The key will be hiding some or more of the cost to the consumer and adding real value.  The bottom line is that many consumers are simply unwilling to pay for music and even fewer are interested in paying a monthly fee for it.  So success lies in making the services free or ‘feel like free’ to the end user, subsidizing the costs through savings to, or increased revenue from other core products.  TDC, the Danish telco, has pioneered this approach with its free-to-consumer service that is available only to its customers.  (A cynic might argue that Spotify is doing the same, subsidizing its free offering with VC funding!) 

 

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When do you opt for your cell phone rather than your computer?

My answer to this question was, "never" until a couple of years ago. Sure, I was more likely to make a phone call on my cell phone than on my computer, but that is to be expected - it has traditionally been designed to be a voice communication device.

Opting for my cell phone rather than my laptop first started for me a couple of years ago. I began using SMS as a substitute for email. Then I started using email on my Blackberry because it would boot faster than my computer. Next came Google SMS - for me it was soooo much faster to get a phone number for a business through Google's SMS service than to call (ok, which costs money) or look online. Then, I got an iPhone and started downloading all kinds of applications. Some I barely use, but .... there are quite a few that I use rather than comparable experiences on the PC. These include Facebook (I'm more likely to be doing something interesting when I'm out and about), Scrabble (tallies the score for you), and maps (stopped printing all those maps out) among others.

For all of these services whereby I opt for my phone rather than my PC, I do so because the experience on the cell phone is more convenient. That means the benefits outweigh the inhibitors to use. When it comes to mobile services, there is convenience when there is value to the immediacy of the information or service, tasks are simple to execute and there is context - like my location.

We lay out this framework in our newly released report, "The Convenience Quotient of Mobile Services: A Facebook Case Study."

Why mobile could reinvent social computing

Many innovative start-ups have pioneered mobile social networking in the last few years: BuzzCity, Peperoni, Fring, Nimbuzz, eBuddy, Zyb, Plazes, Loopt, Foursquare and many others demonstrated the potential of the market.

 

In the last few months, a bunch of announcements clearly showed that the convergence between mobile and social computing is gaining traction and attracting the largest stakeholders:

 

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Amazon Kindle launches globally, sort of

Today, Amazon have launched a new Kindle that they are marketing internationally. Prior Kindle models were limited to use in the US. Key details:

  • Big promotion in the centre of the front page of Amazon sites in the UK, France, Germany and Japan.
  • Only for sale on Amazon.com and priced in USD at $279 (i.e. a $20 mark-up over existing Kindle2). Promotions above have links to Amazon's US site to buy.
  • Books are also for sale only via Amazon.com and are also priced in USD (at least for now).
  • This is the first Kindle that uses a GSM-standard mobile phone radio -- rather than CDMA -- for wireless downloading of books, sync of reading position with other Kindles and the iPhone Kindle app (i.e. to drive Amazon's Whispersync consumer cloud service).
  • Uses AT&T's mobile network and AT&T's global mobile roaming partners for Whispersync.
  • When outside the US, Kindle owners pay an additional charge for each book downloaded, currently USD1.99 per download. I imagine this also includes downloading PDFs via the email to Kindle conversion process and downloading small items like blogs or newspapers.

I'm frankly astonished that Amazon is marketing the above product internationally so strongly. Instead, it looks like a great fit for US residents who want to own a Kindle that works both in the US and when they travel abroad. Or, Amazon could have chosen a much softer and lower key international promotion on their various global sites.

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