The mobile industry is in full swing. Its center of gravity is shifting from hardware to software, from voice to data and services, and from traditional telecom stakeholders to new entrants.
Google’s “mobile first” approach and the shadow that Apple cast over the show are forcing mobile operators in particular to redefine their position in the value chain. The traditional focus on infrastructure (LTE..) and this year’s debate on operators’ congested networks need to be put in the context of nontelecom players’ willingness to monetize mobile. Mobile World Congress is a unique opportunity to witness how mobile is reinventing itself and to see how it will become even more disruptive in consumers' daily lives in the future.
Real Networks yesterday announced that they intend to spin-off music subscription service Rhapsody as a stand alone business. Rhapsody has long been held up as the best of breed music service, but in the age of Spotify and Comes With Music it and other premium rentals have increasingly struggled to maintain relevancy. Spotify and Comes With Music each may have fundamental business issues and are very different offerings, but they both provide unlimited music free at point of consumption. Once you have that proposition in the marketplace selling 9.99 rented streams looses its shine, however good the discovery and usability may be.
This time two years ago Rhapsody, Napster and Yahoo had about 1.8 million paying subscribers between them. Since then Yahoo got out of the game (passing its subs onto Rhapsody), Napster got sold and the total count is now around 1.3 million. So just as the music industry is meant to be booming online, its premium tier sheds over a quarter of its value across its heavyweight proponents.
The simple fact is that charging 9.99 or more a month for music that often only sits on your PC is not a mass market value proposition. It’s great for aficionados but mass market consumers aren’t used to buying music that way.
So is this the end for subscriptions? No, not at all, in fact they’re doing better than ever, it’s just the old guard that is struggling to keep pace. A new generation of subscription services are being built that place portability at their core and that often hide some or all of the end-cost to consumers.
Let’s take a quick look at the numbers, here are total paid subscribers by territory (all numbers are approximate):
Marketers - pay attention. This is an example that seems great in theory, but the "devil is in the details" of the implementation so to speak. This is among the top inquiries I hear from clients, "what do you think about 2D barcodes or QR codes as a means of connecting with customers?" I took this inquiry from a CPG client just a couple of weeks ago. I laid out the challenges. Their response was, "well, we're doing it anyway." Piloting is good - just go into it with your eyes wide open.