The Rise of The Music Phone

When it comes to finding things to do with your cell phone other than, well, making phone calls, Asia is well ahead of the pack. An analyst from wireless research company Portio recently estimated that the number of text messages sent in the Asia Pacific region annually will grow to 2,071 billion messages in 2012 (compared to 967.7 billion in 2006). Across the region, young people are viewing their mobile phones as more than communications devices. Accessorized with all manner of lucky charms and pendants, phones are vehicles for self expression. Increasingly, they’re fulfilling the role of mp3 player, too.

MTV’s Music Matters survey — a sample of 5,741 urban middle class participants aged 15-34 across China, Hong Kong, Taiwan, Singapore, the Philippines, Vietnam, Australia, Korea, Indonesia, Malaysia, Thailand and India — found that 50% of respondents had downloaded music to their phones in the previous month. In China, this number is 68%. 11% in China said that their mobile was their primary music player, and 76% would opt to replace their mp3 player with a mobile music phone altogether. “Downloading music” does not directly translate to “downloading full tracks for listening pleasure,” and may well include a hefty amount of ringback tones and simple ringtones. But it’s a start, and it’s an obvious delivery platform for the future.

Selling mobile music poses as many challenges as it has opportunities. Illegal downloads will continue to be an issue, and a pricing system must be worked out that makes the legal route not entirely unappealing to Chinese kids (81% of whom had downloaded music from for free in the previous month, according to the MTV survey).

This mobile trend was a topic of extensive discussion at Music Matters Asia. Rob Wells, Senior VP of Digital for Universal Music Group International, wondered whether telecommunications companies will be able to promote bands as well as experienced music retailers and labels. Motorola’s Marketing Director for North Asia, Ian Chapman-Banks, cited a favourable business model partnering with China Mobile to provide MP3s. China Mobile takes just 15% of profits, with Motorola taking a small fixed charge and everything else going to the content providers (in this case, record labels). However, consolidation within the Chinese telecoms industry may alleviate the telcos’ needs to work with content providers on such “healthy” footing in the future.

New regulations designed to promote competition amongst Chinese telcos put more pressure on China Mobile to up their profits, which seems to square better with Warner’s recent experience partnering with China Mobile. Lachie Rutherford, President of Warner Music Asia Pacific, said that for a single artist who received 6,500,000 downloads, Warner made 700,000 RMB, while China Mobile walked away with 35,000,000 RMB. It would seem then, that third party aggregators, strategists and marketers (e.g. Moto, or a broadcasting channel) will have more sway with the telcos than will individual content providers providing a single-entertainment channel (e.g. record labels).

Despite these legal, business and logistical challenges, demand is strong and growing stronger: Across Asia, 78% want the music industry to help them access more digital music, and 73% said they want telcos and music labels to work together more closely.

As usual, the brands that are likely to come up with effective new models are those that spend the most time listening to consumers. Nokia’s roll-out of an Independent Artists Club offering free mobile downloads is one of a slew of new initiatives putting the brand in the A&R man’s shoes. It’s then up to consumers to filter this new music. But if history serves, people like being told what to listen to (and watch, and eat), which is why packaged pop commodities have remained in the mainstream. Time will tell whether new user-driven music models will be sustainably successful.