Play That Mobile Music

Is music headed to a handset near you?

When Joan Jettsang about putting another dime in a jukebox to hear her favorite song, she probably never imagined that her jukebox would one day be a wireless handset.

But forget old time rock `n' roll. When it happens, the marriage of music and wireless will pair two of the biggest and fastest-moving industries in an entirely new experience that will revolutionize how consumers interact with music and multimedia content via wireless devices.

It may be a few years until U.S. teens can get the latest Britney Spears hit through their handsets, but wireless-service providers are planning for these future applications while keeping close tabs on the Napster debate.

But Napster isn't likely to deter the market potential of value-added services that will bring sweet music to all ears involved - service providers, music companies, music artists, handset manufacturers and consumers.

The Gartner Group estimates that the market value of entertainment services such as ring tones, icons, logos and games will total $6 billion in 2004.

"We think, based on what we see now in Europe and Asia, that music, as well as gaming, are going to be two of the hottest things that are going to be available on wireless devices when 3G technology gets rolled out," said Ken Woo, AT&T Wireless director of corporate communications.

Boogie-Woogie Wirelessly Before Madonna's latest album arrived in Scandinavia, fans' handsets were ringing to the tune of "Music," the CD's first single.

As part of Warner Music Sweden's promotion of Madonna's new album, the "Music" ring tone and the album's official logo were offered to subscribers of Swedish service provider Europolitan.

The project required close cooperation between the record company and Europolitan. The project also brought a new dimension to record sales and promotion. Europolitan subscribers who downloaded the official album logo to their wireless handsets received a discount on the Madonna CD in stores. As for the record company and artist, Madonna's album quickly shot to No. 1 on the Swedish album chart.

Virgin Mobile's MP3 handset enables its U.K. users to listen to downloaded songs and the radio. Targeting users 18 to 35, the Virgin Mobile-branded Samsung SGH-M100 combines wireless and MP3 technology, allowing users to listen to entire CDs anywhere and at any time.

"It marks the beginning of a new period in music retailing and distribution, and it is the epitome of modern mobile technology - a technology which knows no bounds," said Richard Branson, Virgin Mobile CEO, in a press release.

Via their PC, Virgin Mobile customers can download their favorite music from the Internet or from a CD onto their MP3 dual-band handset. The phone offers 32Mb of memory (enough for about eight songs or 34 minutes of playback) and music-manager software that enables users to digitally store and file their private CD collection or MP3 music, and then download it onto their phone.

A recent U.K.-based report, "Consumers Call the Tune," estimated that up to 3 million MP3 music files are downloaded worldwide from the Internet each day, with global online sales reaching $4 billion, or 8% of the total music market, by 2004.

According to Michael Zevadi, Comverse Network Systems associate vice president of strategic business development for VoiCD, music will be the first killer app of wireless entertainment services.

Comverse's VoiCD platform allows consumers to listen to, purchase and distribute music and other multimedia content over wireless networks. VoiCD combines several different technologies, m-commerce, SMS and the Internet, to deliver music to wireless consumers.

VoiCD manages content, allows CD creation and customization, and supports speech recognition, WAP, SMS and HTML interfaces. Content is cached in a telephony format enabling access through wireless devices and PCs.

Users can access a CD and navigate its different tracks via numerous interfaces, such as speech-driven interactive voice response, DTMF, WAP, SMS or the Web. After listening to a track on their phone, users can buy the CD, create a personalized CD, download an audio clip as a personal ring tone or send a song to friends.

VoiCD allows content owners to offer music, in various digital forms, to users worldwide via wireless networks in a controlled, secure way. VoiCD also provides an environment for record companies to do permission marketing.

"One of the most interesting things for content owners is it completely eliminates all the go-betweens to the end users," Zevadi said. "If they know that you are a Madonna fan, they can now directly send to you samples of the next Madonna CD."

For pricing models, almost everyone prefers a monthly fee, and either unlimited usage for a higher monthly fee, or a lower monthly fee and content pricing that's lower than airtime, Zevadi said.

"Content owners are going toward a very different business model than they use today, which is charging per song, per month, per license, to a revenue-sharing model," he said. "Service providers are going to collect and transfer backward to their content-owner partnership."

AT&T Wireless is working with Ericsson on a handset prototype that features a built-in MP3 player.

"The music area is really something that's being picked up by the youth segment in Europe and Asia. We see that happening here," Woo said. "As the technology gets better and we improve on compression technology, it makes all the sense."

Shake & Rattle, Then Roll Out? For downloaded ring tones in Europe, providers collect revenue and the entertainment industry receives copyright payments. With U.S. value chains not even close to being determined, providers and music companies will pay close attention to the Napster decision.

Some U.S. providers have whispered that wireless-music applications will be huge, if the industry can get past the legal issues that cloud the area right now. Regardless of Napster, providers said that music applications should be handset- rather than network- based to stem copyright issues. But instead of fearing illegal duplication a la Napster, the music industry seems to be excited by the prospect of wireless music.

"In a wireless world, geographical boundaries are removed," said Jay Samit, EMI Music spokesperson, at Comverse's recent User Forum. "It's a huge opportunity for recording artists and consumers."

VoiCD is a network-based solution, but end users don't actually get a copy of any content. Comverse is working with content owners to free providers from copyright issues.

"We've spoken to three of the major five (music companies) and, initially, they were very much unaware of the mobile industry - the size, its potential, the way it works, how much people spend each month with providers," Zevadi said. "They understood it quickly, and they understand that they've put way too much energy into the Internet industry, in most cases being on the defensive."

According to Zevadi, people copy music illegally from the Web because it's convenient and easy. Solutions such as VoiCD will make it even easier and legal, he said.

"The record industry wants to sell more music, people on the go want an easy way to make their own compilations and the telcos want to sell more airtime," he said. "It's a win-win-win situation."