Big Music Takes on Steve Jobs

The digital music revolution put Steve Jobs back on top. But nothing stands still. How record companies and telcos will try to steal the digital music business away from Apple.

Talk about inauspicious beginnings. Apple Computer’s iPod launch the month after 9/11 went largely unnoticed except by analysts who dismissed it as an expensive accessory for the Apple set. Technical problems, which caused some early units to quickly fail, couldn’t have helped. Apple’s stock price slipped $0.88 the day iPod was introduced.

But Steve Jobs, Apple’s chief executive, was just warming up. He soon cranked up the volume by convincing major record labels to distribute their tracks at his iTunes online music store.

iPod sales soared after he released iTunes for Windows, opening Apple’s digital music ecosystem to all computer owners. The iPod revolutionized the way people listen to music, challenging rival hardware and software makers and forcing the recording industry to follow his lead.

Call it Round 1 in the battle for dominance of the digital entertainment market and score it decisively in Apple’s favor. But now a growing ensemble of record labels, computer hardware and software makers, mobile carriers, and handset manufacturers are determined to take away its lead. “iPod is as ubiquitous as Crest toothpaste,” says Ted Cohen, a digital music consultant who used to set digital music strategy at EMI. “But we’re going into a new phase now.”

They won’t say so publicly, but record companies fear that Apple’s success has already given it too much clout in the burgeoning digital music sector.

The digital music market of tomorrow is full of promising new services and gee-whiz features. People who today download single tracks from Internet music stores will soon likely be music subscribers—downloading or streaming as much music as they want to their computers or phones for a fixed fee, and even sharing tracks with fellow subscribers. Those subscribers will also probably be able to program their “music valet” to scour the Internet for their kind of music and then make sure that it’s automatically downloaded upon release.

For a taste of the future, consider U.K. startup Shazam Entertainment, which has already developed recognition software for mobile subscribers who hear songs they don’t know: a subscriber just dials in a code and holds up the phone so Shazam’s “discovery engine” can solve the mystery.

“This market will be evolving,” says Gartner analyst Mike McGuire. But just how depends on which companies define the market. The stakes are undeniably high. Record companies racked up $1.1 billion in digital music sales in 2005, almost 6 percent of their overall music revenue. Digital sales are projected to account for 8 to 10 percent of record company revenues this year. On the hardware front, market leader Apple’s iPod sales topped $7.3 billion in the last 12 months.

Jockeying for Position

But that is just the tip of the iceberg. The very rivals jockeying over music right now are also laying the groundwork for products and services that will deliver music videos, games, television shows and movies, and user-generated content in the not too distant future.

“If you don’t make your mark in music now you’ve marginalized yourself as a digital entertainment provider for the future,” says Larry Moores, senior vice president for global marketing and business development at WiderThan, which builds platforms for mobile music services for customers like Verizon Wireless in the United States and South Korea’s SK Telecom.

Two business models are emerging. SK Telecom, for example, now accounts for half of South Korea’s entire music market after launching its MelOn service two years ago. About 600,000 of MelOn’s 4 million-plus users are $5-a-month subscribers getting unlimited music via PCs and phones—certain proof that the subscription-based mobile model works.

Fixed-priced single-track downloads via the Internet are all the rage in the U.S. and Europe thanks to Mr. Jobs. Apple’s approach has earned it more than 70 percent of the U.S. portable music player market and 85 percent of the U.S. digital music market. Apple faces strong local competition in Germany and France, but Mr. Jobs still leads the European market, too. “He’s in a position to invent the future,” says Phil Leigh, an analyst at Inside Digital Media.

Maybe, but not if the record companies have their way. They won’t say so publicly, but they fear that Apple’s success has already given it too much clout in the burgeoning digital music sector. Mr. Jobs is clearly more concerned with selling iPods than songs, so it was not surprising when he rejected the labels’ attempt to introduce variable pricing at his music store: he called them “greedy” for even asking.

One analyst says the record companies are angry that they have turned Apple into “a digital Wal-Mart.” And they’re mulling different business models to fight back. Universal Music Group has already announced that it will offer ad-supported digital music tracks for free through SpiralFrog, a digital media site set to launch in December. Other plans feature advertising-supported peer-to-peer services such as those soon to launch from startups Qtrax and Mashboxx.

But these services won’t likely make any headway if the industry doesn’t tackle the interoperability issue, one big lesson learned from Round 1.

Microsoft learned that the hard way. It teamed up with hardware partners like Creative and iRiver, as well as music stores like Napster and Yahoo Music, which built devices and services based on the software giant’s WMA file format. Microsoft promoted its devices and services with its “Plays for Sure” campaign, but they didn’t always live up to their billing and consumers stayed away in droves.

Sony also tried to get in on the act with its digital Walkman and music store, which used the company’s proprietary ATRAC file format. The result was a digital music market that was flooded with a bewildering array of devices, music stores, formats, business models, and prices.

iPod Mania

Apple, of course, was different. It was the only company that delivered a cool music player and a revolutionary music store that are seamlessly bound together with Apple’s proprietary software. Critics, of course, point to this closed music system and recall how Mr. Jobs squandered Apple’s early lead in the computer market because he refused to license his technology. PCs, on the other hand, thrived because scores of manufacturers built cheaper machines using industry-standard chips and software.

The difference this time, perhaps, is that consumers have snapped up more than 58 million iPods so far, raising concerns that the market has reached a tipping point at which Apple becomes the de facto standard. Worse yet, all those iPod owners are leading trends that should drive digital sales for years, so the challenge for record executives is to undercut Apple’s growing retail clout without alienating users.

“We want to make sure things are pretty seamless for people,” says a record company executive. “If you buy a piece of bread, you should be able to put it into any toaster you want.”

There is one solution that could work, one so radical that major labels considered it heresy only 12 months ago: sell music in MP3 format without the digital rights management (DRM) software they long argued was essential for preventing rampant piracy.

Unprotected MP3 tracks play on any portable music player, including the iPod. Music companies would have to swallow hard, though: unsheathed MP3s were exactly what allowed Napster to popularize illegal file-sharing, which hammered CD sales in the late 1990s.

Yahoo, which opposes DRM, broke a critical sound barrier in July when it began selling pop princess Jessica Simpson’s latest hit in unprotected MP3 format.

And some record executives now privately hint at releasing larger samples from their catalogues in MP3 format to test whether these tasters would ramp sales or boost piracy.

Many see DRM as confusing and annoying to consumers, an impediment to really developing the online market. Today’s standards war only discourages sales of players and tracks. Free music from closed standards, MP3 proponents say, and consumers would flock to any and all music stores in an orgy of digital downloading.

eMusic.com certainly makes a case for simplicity. It captured second place in the U.S. online music market by offering subscribers a set number of unprotected MP3 tracks every month. The major labels have stayed away, but practically all of the smaller independents are on board and they argue that selling music in MP3 format allows them to get out their music to as wide an audience as possible. “DRM stands between what people want and our ability to provide it,” says Jim Sturgeon, president at Naxos, one of the world’s largest classical music labels.

Seeking an Audience

Besides sorting out formats, the recording industry must also find alternatives to radio stations for turning songs into hits.

An obvious step would be for music retailers to tap into the social networking craze. Internet denizens can already list their favorite songs and bands and make recommendations on social networking sites like MySpace.com or MOG.com, which is dedicated to music. But users must then navigate to music stores to download tracks. It seems only a matter of time before major services combine the information and purchase functions.

“It’s not just about viral marketing, sharing, and recommendation,” says Gartner’s Mr. McGuire. “They need to link all that with transaction triggers.”

Microsoft is trying to do this with its Zune line of digital entertainment products expected to start shipping later this year. It includes an online service and a wireless music player and while details are scant, the company has repeatedly said its goal is to create a service that enables consumers to connect with others to discover new music and entertainment.

Can Microsoft catch up to Apple? The software giant will certainly try, for it can ill afford to leave Apple in control of the emerging digital entertainment market. Microsoft has demonstrated more than once that it can beat back competitors fielding better products, and it has the resources to do it again.

Encouraged by booming consumer demand for ring tones, the global mobile phone industry also hopes to cash in on digital music by shifting to full-track downloads. Carriers see music as a way to generate revenue from their massive third-generation investments, while handset makers see music as the next killer app to drive phone sales.

Leading the Digital Revolution

Japan has certainly demonstrated the potential of the wireless model. Mobile music applications account for at least 90 percent of the country’s digital music market. Chaku-uta Full has led the way since its launch in November 2004—it’s sold more than 50 million full-length songs via telecom KDDI. NTT DoCoMo, Japan’s largest mobile company, has also started to sell over-the-air full-song downloads.

SK Telecom followed up last year’s acquisition of YBM Seoul Records, South Korea’s biggest music company, by forging a joint venture with Warner Music Korea. The recently completed deal marked the first time a major music company fully merged its operations with those of a communications network to create a technology-content hybrid to make music available on cell phones and other digital platforms.

In the U.S. and Europe, less than 10 percent of digital music is downloaded over the air so it’s hardly surprising that iTunes dominates in the U.S., where mobile carriers have just begun to roll out full-track music services. But what makes Apple’s lead in the European music retail market so remarkable is that their mobile culture is so advanced compared with North America.

But there’s a caveat. While carriers like 3 in the U.K. and Telefónica in Spain aggressively promote mobile music services, Europeans still prefer to download music to their computers and then “sideload” tracks to their phones, according to Jaap Favier, vice president at Forrester Research in Amsterdam. “It’s very expensive and very cumbersome to find a track on a digital phone,” he says. Mobile downloads are expected to account for only about 20 percent of digital full-track music sales by 2011, he adds.

Industry analysts say, and some carriers privately acknowledge, that the biggest impediment to mobile music sales is pricing. Record labels, in a bid to carve out a bigger slice of the mobile music pie, are understood to have set wholesale prices for carriers of between $1 and $1.40 per track—significantly higher than the estimated $0.65 to $0.75 they are charging Internet music stores like iTunes. Also taking a cut are application service providers like WiderThan, Groove, and Melodeo, which provide the music downloading platforms that power carrier stores.

“Everybody wants 50 percent. The ASP wants 50 percent, the labels want 50 percent, and the carriers want 50 percent. It’s not going to work,” says Inside Digital’s Mr. Leigh.

Carriers also are grappling with the same interoperability issues that Internet music stores face—a big problem in the U.S. and Europe because most digital music consumers have consolidated their collection in a single jukebox on their computer, and that usually means Apple’s proprietary iTunes.

The Open Mobile Alliance, an international body of carriers, vendors, and content providers, is trying to work around this hurdle by developing interoperability standards, but those remain elusive. “The [carriers’] business models and agendas are really getting in the way of natural consumer behavior,” says Yankee Group wireless analyst John Jackson.

Phone Play

Yet, the trend appears inevitable: more mobile subscribers are gravitating to phones that can also store and play music, even if the majority of tracks are sideloaded. An estimated 27 percent of the mobile phones sold globally this year store and play music, according to market research firm Ovum. That will reach 69 percent by 2010.

Sony Ericsson is pinning its hopes on new Walkman phones, while Nokia, which predicts it will sell 80 million mobile phones with integrated music players this year, is shaping up to be one of Apple’s key rivals.

Apple is also widely believed to be eyeing the mobile music market. Apple won’t comment, of course, but some suggest it could launch a virtual mobile network, buying wholesale airtime from a carrier and contracting out billing and customer support so it could focus on marketing and content.

Others believe Apple will build an unlocked GSM phone that works with any GSM carrier in the world—a natural, you’d think, for any carrier wanting to provide over-the-air access to iTunes. Or customers could simply sideload tracks from their computers to their “iPhones,” regardless of the carrier they use.

Some critics, of course, argue that Apple has no experience in the mobile market and say Mr. Jobs doesn’t work well with partners.

Apple has managed to stay one step ahead of its music rivals for the past five years and now that the sector is gearing up for Round 2, pundits suggest that Mr. Jobs will once again raise the bar—this time incorporating wireless technologies, subscription services, and social networking into the company’s digital music portfolio.

Mr. Jobs has so far expressed little interest in making any such changes, but then again, he once argued that people would not want to watch video on a tiny screen—only to launch a video iPod shortly afterward.

(c) RED HERRING

Technorati tags: mobile music

NTL launches first broadcast TV service to mobiles

Virgin Mobile,which is now part of the cable company NTL, will next week produce its latest attempt to attract new customers and retain existing users, with the launch of a mobile TV service.

Operated by BT's Movio unit, it will be Britain's first proper broadcast mobile TV service, and it will offer several UK digital terrestrial channels.

The channel line-up will be announced next week, but during a trial of the service within the M25, in southern England, last year, participants were offered a selection including Sky News, Sky Sports News, E4, ITV2 and the Blaze music channel. Customers will need to have a home TV licence for the service.

As it makes use of part of the existing digital radio spectrum, the service will allow anyone with a compatible handset to listen to hundreds of digital radio stations.

Results from last year's trial suggest radio, rather than a limited number of TV channels, is more attractive to the public. At the end of a six-month trial, 59% of the participants rated mobile television as "appealing" or "very appealing", while 65% said the same of digital radio. Those taking part watched an average of 66 minutes of television a week on their phone but listened to 95 minutes of radio.

Virgin Mobile's research showed that most users were willing to pay about £5 a month, though a figure of up to £8 was acceptable to some.

In the face of fierce price competition in the core voice-telephony and text markets, mobile phone firms are on a quest to find services that will either generate new revenue or cut costs by preventing customers defecting to other networks. Virgin Mobile and Orange are already bundling residential broadband internet access, and O2 and Vodafone are poised to follow suit. Several operators, including Vodafone and 3, already offer streamed or downloaded television services over their "next-generation 3G" networks.

High take-up of such services could lead to capacity constraints. So mobile phone operators have been looking at variants of traditional broadcast TV which will require investment in infrastructure but not jeopardise existing networks.

The Virgin Mobile service will only be able to offer about six channels because of bandwidth restrictions. O2, which, in Oxford, has been testing a Nokia-backed broadcast standard called DVB-H, offered 16 channels. Participants spent an average of four hours a week watching mobile TV.

Richard Wray
Thursday August 31, 2006
(c) The Guardian

Technorati tags: mobile TV, 3G, DVB-H

Скорость интернета вырастет на порядок

Скорость интернета вырастет на порядок Samsung Electronics продемонстировала работу первой в мире технологии передачи данных четвертого поколения (4G). По словам представителей Samsung, новая технология позволит пользователям загружать 100 mp3-файлов менее чем за 3 секунды, даже когда абонент находится в движении.

Демонстрация технологии проходила в автобусе, двигавшемся со скоростью до 60 км/ч, во время проведения телекоммуникационного форума Samsung 4G на Южно-Корейском острове Джеджу. В автобусе одновременно велась прямая трансляция форума, работала служба видео по запросу (VOD) и осуществлялся доступ в интернет. Таким образом демонстрировалась стабильность и скорость соединения 4G, работающего на скорости 100 Мбайт/с, утверждают представители компании.

По сравнению с технологией беспроводного широкополосного доступа WiBro 4G гарантирует более быструю передачу данных и другого мультимедийного контента. WiBro, платформа связи третьего поколения (3G), обеспечивает абонентам, движущимся со скоростью до 120 км/ч, скорость доступа в интернет 2-3 Мбайт/с. В Южной Корее коммерческое использование службы WiBro началось в июне этого года.

Технология 4G позволит пользователям смотреть многоканальные телетрансляции высокой четкости и управлять домашней бытовой техникой с помощью мобильного устройства. "С помощью данной успешной демонстрации мы рассчитываем дать толчок развитию и стандартизации технологий мобильной связи 4G и реализовать нашу мечту о начале эры 4G", – сказал президент телекоммуникационного подразделения Samsung Ли Ки-Тае (Lee Ki-Tae). Samsung планирует запустить новую технологию в коммерческую эксплуатацию к 2010 г., если характеристики и диапазоны частот для 4G будут определены в следующем году. "Мы сможем разработать мобильные телефоны, использующие технологию 4G, к концу 2008 г.", – добавил г-н Ли.

Международный союз телекоммуникаций определяет технологию 4G как будущее технологий беспроводной телекоммуникации, которая позволит достичь скорости передачи данных до 1 Гбайт/с в условиях движения источника или приемника и до 100 Мбайт/с в условиях обмена данными между двумя мобильными устройствами. Официальные представители Samsung считают, что технология 4G станет локомотивом развития связи в Южной Корее.

(c) CNews.com

Admob Serves 250 Million Ads

Pay-per-click mobile advertising company AdMob has announced it has served 250 million page impressions per month now (worldwide), and it started eight months ago. More interesting, its click-through rate is 3-4%, which is a lot higher than similar ads on the web but a lot lower than some other forms of mobile advertising. The real question with the click-through rate is whether mobile advertising is inherently more valuable to consumers so they use it more or whether the higher rate compared to the web is based on novelty and accident value...

(c) MocoNews

Technorati tags: mobile, ads, advertising

Mobile Video Industry Will Begin to Shape up in 2008 According to In-Stat

The market for long form mobile/portable video content (video content of greater than 30 minutes) is currently in an experimental phase, and will likely remain at this stage for at least two years, reports In-Stat.

By 2008, however, the industry will begin to gain traction and demonstrate its long-term potential, the high-tech market research firm says.

"The greatest potential for this market rests with its ability to complement the existing video industry. For example, there will be over 50 million portable media players in use worldwide by 2008," says Michael Inouye, In-Stat analyst. "The portable/mobile long form video market will not likely cannibalize sales from the DVD and other traditional markets, but rather, supplement top-line growth."

Recent research by In-Stat found the following:

• It is not clear if users will prefer an all-purpose multimedia cellular phone or separate voice and multimedia devices.
• Mobile video subscribers stand to represent over 10% of US wireless subscribers by 2009.
• Roughly one out of eight respondents in an In-Stat survey of mobile users expressed interest in mobile video for the cellular market.

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About In-Stat

Technology vendors, service providers, technology professionals and market specialists, worldwide, rely on In-Stat's experienced staff and in-depth research to support critical business, product and technology decisions. In-Stat's insights are derived from both a deep technology understanding and comprehensive research, which examines each segment of the value chain for each market. Regular and ongoing end-user demand and primary research surveys underpin much of the analysis, enabling In-Stat to provide incisive market knowledge and guidance on future market opportunities.

In-Stat is a strategic segment of the $9 billion Reed Elsevier global information network, with access to an expansive worldwide electronic network, extensive technology databases and well-informed personnel. As a member of Reed Business Information, In-Stat is a division of the largest business-to-business publisher in the U.S.

(c) InStat
Published by BUSINESS WIRE

Technorati tags: mobile TV, mobile video

MTV focuses on the digital frontier at 25

When MTV: Music Television debuted on August 1, 1981, many media experts felt it was doomed.

It was an experimental format trying to get established on an experimental platform -- cable TV. The idea of a 24-hour music video channel never would have worked on traditional broadcast TV at the time. Only in the niche environment of cable could such an idea take root. And did it ever.

MTV programming now appears in some 442 million households in 167 territories worldwide, including 88 million households in the United States, according to MTV Networks.

On the way to becoming an omnipresent youth brand, MTV exemplified the promise of cable TV. "I want my MTV" became not only a call to action for cable operators, but a cultural catchphrase. Along with HBO and a handful of other early cable visionaries, MTV helped legitimize the then-questionable model of pay TV and proved the axiom that has become the rallying cry for all new delivery platforms since: Content is king.

FACING THE UPSTARTS

Today, 25 years after it aired its first music video ("Video Killed the Radio Star" by the Buggles), MTV finds itself in a much different business environment. No longer the upstart challenger to the big media status quo, it is itself a media giant targeted by digital-age challengers. Internet destinations like MySpace, YouTube and even Yahoo are vying for a piece of MTV's once-defining content -- music videos -- as well as competing to be the next purveyor of cool, youth-driven pop culture upon which MTV built its empire.

Like the other mature media giants, MTV's greatest challenge is to determine exactly what it wants to be in this new media era.

"That's true not just for us, but for everyone," says MTV president Christina Norman, who took the helm in May. "All the media companies now are having discussions about things that never would have been fathomed two, three years ago. I think we're finally moving beyond the phase where everyone was afraid to move because they were afraid of making the wrong move, and instead they're just trying things to see what happens."

Just as MTV expanded its programming beyond videos into reality TV and news, it also has been active in establishing a presence on new digital platforms.

MTV.com went live in October 1995, offering the traditional MTV mix of music news, photos and video along with other pop culture information and content.

Then came MTV Overdrive, a broadband Internet video-on-demand service that more closely matches the company's on-air presence with more robust video capabilities. Since it launched in April 2005, Overdrive has become the company's flagship online destination, with more than 1.5 million video streams per day. According to Norman, the biggest challenge is determining how to organize all this content into an easily searchable site.

ENTERTAINMENT EXTENSIONS

With the 2005 Video Music Awards, MTV began experimenting with what Norman calls an "extended viewing experience" that she is now applying to other MTV shows. During the VMAs, Overdrive viewers were able to watch behind-the-scenes footage during commercial breaks and otherwise interact more broadly with the event.

Norman says the trial was a huge success, so much so that MTV is applying the same experience to such shows as "TRL."

This strategy of using the Internet to give viewers more access to content extends to MTV's university feed, mtvU, with its Internet counterpart, mtvU Uber. Norman says she may consider airing other MTV niche programming, such as MTV World, over the Internet.

Wireless is a particularly important medium for MTV. When ringtones began their upward arc, MTV got in on the game through a partnership with the teen-focused Virgin Mobile, offering exclusive ringtones unavailable to other carriers. It even commissioned hip-hop producer Timbaland to produce a suite of original ringtones.

The company continues its mobile presence beyond music, striking deals to bring original short-form programming -- such as animation and live-action video -- to mobile phones.
The mobile strategy has expanded with Flux, a mobile content service that takes different forms in different countries. In the United States, Flux is MTV's direct-to-consumer mobile content storefront, selling ringtones, graphics and so on.

MTV is exploring digital downloads with the test launch of Urge, a subscription music service that is integrated into the next version of Microsoft's Windows Media Player.

CARVING A SOCIAL PROFILE

Just as Urge faces dominant competition from iTunes, MTV was outflanked in the social networking boom when its parent company, Viacom, in 2005 lost out to News Corp. on the bidding for MySpace. Since the acquisition, MySpace's usage has quadrupled, and only the video-sharing site YouTube has come anywhere close to matching its success.

As a company that built its brand as a meeting place for young adults, pop culture and music, MTV will not meekly surrender that digital turf to MySpace and YouTube.

"We know we want to be in social networking, and we know that's where our audience is," says Norman. "But it's important for us to approach this in the right way and not have another 'me too' application."

One strategy is to extend many of MTV's social outreach efforts like Rock the Vote, sexual health campaigns and town-hall-style meetings with politicians into an online community.

On the entertainment front, MTV is readying a number of services that let users post their own content and interact with MTV's content on multiple platforms. Norman says to expect specifics "in the next couple of months."

Content is still king for a company whose programming includes not only vast volumes of music videos but also original series like "The Real World," "Beavis and Butt-Head" and "Punk'd." Yet the challenge and the opportunity in an age with multiple delivery platforms is to determine which content works best via what channel.

"A lot of us are learning how to create to the platform rather than just spreading content across platforms," Norman says. "It gets harder and harder the bigger you get. You'd love for everything to be interconnected in some way or another, but that may not always be the right thing for that channel or that audience. For us it's always about making it addictive for the audience and not just shoving another (program) down (their) throat."

(c) Reuters/Billboard

Technorati tags: reality TV, MTV, video streaming

On advertising: Pitching via cell

Eric Pfanner
(c) International Herald Tribune
Published: August 27, 2006

PARIS The mobile phone, the pitch goes, could be the most powerful marketing tool ever invented. Until recently, however, cellphones have been mostly about talking the talk (or texting the text). Now, from an advertising perspective, there are signs that they may be starting to walk the walk.

Worldwide, there are twice as many cellphones as PCs, and in developed countries, at least, most new phones can provide access to the mobile Internet. For advertisers who want to know more and more about their audiences and how they spend their days, cellphones can even one-up the old-fashioned, wired Internet: Not only can they track users' online clicks, they can trace their steps, too, making it possible to home in ever more closely on target audiences.

Despite the obvious potential, however, advertising via cellphones has been slow to develop, except in Japan and South Korea. One reason is the sluggish take-up of content services delivered via high-speed wireless networks. Also, analysts say, cellular operators have been reluctant to yield the equivalent of television or Web-site ratings for their mobile media offerings, frustrating marketers who crave "measurability" when buying advertising space and time.

SMS-based campaigns inviting consumers to request product information or to register for contests via text messages have proved effective in reaching niche audiences in Europe. Because of a fear of spam, however, regulators and mobile operators have required advertisers to limit this to customers who "opt in."

If text campaigns have dominated the first phase of mobile advertising, then recent weeks may have brought a new stage of development, analysts say. Several big European mobile operators, including France Télécom's Orange and Hutchison Whampoa's 3 unit, have started selling banner ads on their wireless media portals.

Several U.S. cellular carriers, including Sprint Nextel and Verizon Wireless, which initially resisted such advertising for fear of offending customers, have also been testing banner ads on their mobile Web portals. Operators are also experimenting with short video ads, called bumpers, to accompany video clips and mobile TV.

Meanwhile, operators like T-Mobile of Germany, Vodafone and 3 have made deals with online search engines like Yahoo and Google, promising to expand the lucrative world of search-based advertising into the mobile realm. While the search engines already operated mobile sites, the new deals bring them into the European cellular operators' "walled gardens," within which most mobile Web traffic has been confined.

Interest in so-called text-based campaigns also seems poised to grow. Jonathan Bass, managing director of Incentivated, a mobile marketing company in London, said his company expected a five- or six-fold increase in such activity next year from the levels of this year.

Analysts acknowledge that forecasts for the growth of mobile marketing and advertising are just educated guesses, but Jupiter Research sees a €700 million, or $895 million, market in Western Europe by 2010, up from less than €100 million now. Ovum, a telecommunications consultancy, forecasts a $1.3 billion U.S. market by 2010.

Some telecommunications executives are skeptical about the potential, warning that consumers will resist efforts to intrude on their intimate relationships with cherished mobile phones.

"It's not something that will revolutionize our industry, not something that will change our business model," said Boris Nemsic, chief executive of Telekom Austria.

Mobile operators are testing business models that would allow consumers to receive free content or discounted services in exchange for agreeing to receive advertising.

The Mobile Marketing Association, a trade group, is trying to smooth the development of mobile advertising by creating uniform standards for ads, making it easier to run campaigns across a variety of operators' networks. Working with media owners, media-buying agencies, mobile operators and companies like M:Metrics, a firm based in Seattle that tracks mobile use, the group is also trying to solve the problem of measurability.

"It's definitely a promising market," said Nicki Walton, senior research analyst at Informa Telecoms & Media. "But quite a lot of issues need to get resolved before it steals advertising dollars from radio, TV, outdoor, print and online."

Technorati tags: advertising, mobile marketing, video ads

German mobile TV Tests Successful

The DVB-H pilot project launched in Germany, by E-Plus, O2, T-Mobile and Vodafone has demonstrated the future potential of handset TV.

In an initial showcase phase, the four network operators have spent three months since the end of May providing Berlin, Hamburg, Hanover and Munich with an extensive TV programme offering on the basis of the DVB-H standard. Both Federal and L?er authorities, as well as the regional media authorities primarily responsible for the granting of frequencies, are now being called on to enable a rapid implementation of the service and of broad market access.

The mobile handset television pilot project in the DVB-H standard (Digital Video Broadcasting Handheld), which was launched for the football World Cup by the German mobile operators E-Plus, O2, T-Mobile and Vodafone, has successfully demonstrated its performance capabilities.

Over a period of three months, around 1,000 test devices were made available in total, including both prototypes and pre-series devices from various manufacturers. In connection with the stable technical operating platform, the response from participants was extremely positive. Whether they were at the Brandenburg Gate in Berlin, in the Olympic Stadium in Munich, on the banks of the Alster River in Hamburg or in the "fan mile" in Hanover, users were impressed by excellent picture quality, good reception and an extensive range of programs. Cooperation with the broadcasters was very successful.

The operators are focusing on the groundbreaking DVB-H technology that already enables the transmission of TV and radio programmes on 16 channels. In future, DVB-H will offer the potential to transmit up to 40 programs to a practically unlimited number of handset users. In the case of DVB-H, data transmission rates for content are being adapted to the possibilities for handset display presentation and available battery performance. Another interesting development is the potential future connection of DVB-H and GPRS/UMTS-based mobile telephone applications that create added value for users: for example, the feedback channel that runs via the mobile telephone data networks will make it possible to enable interactive program formats and deliver additional programme information. All four network operators are convinced of the fact that handset TV based on DVB-H can be developed into a genuine success model. For instance, interactive entertainment and information formats could provide positive impulses for Germany as an educational and business location.

At the IFA (Internationale Funkausstellung), the international consumer electronics trade fair in Berlin, visitors will again be able to experience for themselves the quality of DVB-H. The four operators will be demonstrating the technology at the IFA, at the Technical-Scientific Forum stand (Technisch-Wissenschaftliches Forum).

The DVB-H pilot project has confirmed that handset television offers a high degree of innovation and market potential for the German market. The prerequisites for exploiting these future opportunities are at hand: besides the already established acceptance by future users, this technology enjoys the support of the leading handset manufacturers. Among others, BenQ Siemens, Motorola, Nokia, Sagem and Samsung are focusing on the new technology. An operator consortium of E-Plus, O2, T-Mobile and Vodafone, which is currently being put in place, is intended to facilitate the efficient use of frequencies and the rapid opening of the mobile TV market. This planned shared venture does not intend to generate its own media content but instead will offer mobile telephone company subscribers existing television programs via the new transmission network and will develop innovative formats in co-operation with the programme suppliers.

In order to be able to develop a broad product spectrum for handset television in Germany, a suitable network infrastructure must be created and maintained. The German mobile network operators are at their starting positions and are ready to invest millions to meet this objective. However, in order to ensure a rapid and comprehensive introduction of DVB-H, the requisite statutory planning security must be created. This means that transmission frequencies must be made available across the whole of Germany and a harmonised regulatory framework must be created for this innovative service.

The relevant authorities need to implement decisions soon if Germany is to avoid falling further behind its international competitors. For example, DVB-H has already been launched in Italy on a commercial basis and it is about to be launched in Finland. In this respect, Germany has already relinquished the role it established as innovation leader, when it gained the distinction of running the first technical pilot projects in 2004. This makes an adjustment of broadcasting media policy that enables a rapid opening up of the handset television market an even more urgent priority than ever.

(c) CellularNews

Technorati tags: mobile TV, DVB-H

Going Mobile With Drama

Making mobile components to some forms of TV shows is easy, such as with gameshows or talent contests. Others are more difficult, and drama shows are reportedly the most difficult.

A lot of the story focuses on the BBC's experience in creating tardisodes for the new Dr Who series. The format for mobile screens is in a 4:3 ration rather than the 16:9 of a TV screen. "The trouble is, all the material you shoot might also one day need to be put on the TV screen or onto DVD, which require a 16:9 aspect ratio. "So for Doctor Who's ‘Attack of the Graske' and Tardisodes, we shot everything 16:9 but made it all 4:3 safe," said BBC interactive producer Jo Pearce."
There are other issues, such as the fact that sound on a mobile phone is appalling. It's not even speech that is the problem really, but the atmosphere created by sound. Also, visually rich scenes can cause problems (a scene with fire caused the mobile screen to fuzz) and have to be reshot, which of course costs extra.
"Drama is the most expensive TV genre, a reason that drama on new media platforms has, so far, mainly been spun-off from a main TV series. "It's crucial to piggyback off the main production as much as we can," said Pearce about the making of the Doctor Who Tardisodes. "If we hadn't come off the back of the show we wouldn't have been able to afford the sets."
Mind you, there was an interesting point about writing for the new medium, with Lee Hardman, head of Mersey TV's Conker Media, the outfit behind Hollyoaks' new media spin-offs, claiming there is no problem. "Storytelling skills are transferable, as is an understanding of narrative." For Aardman's broadcast and development manager Helen Brunsdon, thinking too much about the platform distracts from what really counts creatively. "Whatever works on mobile phones should work on a TV or cinema screen," she says. "A good idea is a good idea regardless of where you see it. We're driven by character and ideas regardless of the output device."

(c) Mad.Co.UK
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Technorati tags: mobile TV