Carriers urged to pursue mobile music

LOS ANGELES-Carriers worried about becoming a “dumb pipe” should jump headlong into the digital music waters, according to entertainment executive Kedar Massenburg.
Network operators have “the opportunity to become the record companies of the future,” the lawyer-turned-music-mogul urged during his keynote address at the Mobile Marketing Forum 2006 in Los Angeles last week. Massenburg said carriers can cut traditional record labels out of the value chain by investing to identify new talent and create the stars of tomorrow.
“You guys have the opportunity to do something different, because of the masses, the kids you reach,” said the founder of Kedar Entertainment, which discovered such acts as Erykah Badu and D’Angelo. “This should be a piece of cake for you.”
Indeed, the personal nature of the mobile phone and carriers’ substantial distribution advantages may offer the best way to boost digital music sales. But it’s unlikely carriers will rush to establish internal music departments: operators have only recently begun to staff up to address mobile mobile games, which have been available on carrier decks for years, and carriers seem far more interested in becoming the next iTunes than the next EMI.
Most importantly, network operators view wireless advertising-not music-as the most promising potential revenue stream of the near future. Instead of painstakingly spending valuable resources to uncover and polish diamonds in the musical rough, carriers are hastily trying to find ways to use advertising dollars to support mobile entertainment offerings.
And carriers have much yet to do in laying the foundation for a viable mobile marketing industry, according to Sprint Nextel Corp.’s John Styers. Network operators must establish front-office roles as they struggle with the increasingly blurring lines between mobile marketing, content and search and other data services.
“All of us are going to benefit from (mobile advertising) once we get our acts together,” Styers said during a roundtable discussion, “and build an advertising platform that can get some real response rates.”
Massenburg, an African-American, also noted the lack of diversity at the event, chastising the industry for failing to meet the needs of the most voracious consumers of digital music: urban youth.
“There’s only two black people in here,” he said during his speech. “That’s the dumbest (thing) in the world.”
But whatever disconnect may exist between wireless carriers’ corporate mindset and the youth market may open a window for artists, record labels and software developers looking to go off-deck to reach music lovers. Young subscribers are far more likely to wander away from carrier decks in search of mobile content, and could be lured by direct-to-consumer content providers who grasp the edgy hip-hop culture that carriers may not be able to reach, according to Paul Campbell of QD3, a cross-platform distributor of music videos and other digital urban content.
“Their kids understand what we’re doing, but they don’t,” Campbell said of wireless CEOs during the Digital Entertainment Media and Marketing Excellence conference that followed the marketing event. “There is an education process that needs to take place, and that is an opportunity.”
Still, sheer subscriber numbers could give carriers instant entry to the digital music playground, Massenburg said. While record labels might make fine partners, network operators willing to take the long view and spend the resources to “grow” their own talent could build a new revenue stream and increase stickiness as they help transform the music industry for years to come.
“You have to be innovative and to take that chance,” Massenburg urged. “You have to take on the same challenges the record companies take.”