Executive Interview: Sean Rosenberg

Five years after 50 Cent’s “In Da Club” helped launch the multibillion-dollar ringtone phenomenon – and as CD sales continue to plummet – the music industry continues to look for its second hit in mobile. We talked to Sean Rosenberg, director of mobile marketing for the RCA Music Group, about flattening ringtone revenues, flailing full-track services and how to use mobile for more than just one-off content sales.
Music labels were notoriously slow to recognize both the opportunity and the threat posed by the Internet. How does mobile differ from the Web with respect to both opportunity and threat?
Mobile was an interesting endeavor. When it first came about, it was about the same time as Applemusic.com, which has now turned into the No. 1 (digital music service). We’ve seen a juxtaposition. Online music started as purely promotional, and now everyone is still rattling around trying to figure out, how do we monetize every little part of it?
Whereas the first mobile opportunity was purely around revenue, and it was around one of the only true mobile applications: mastertones. There are so many brands and companies trying to get into the mobile space just by throwing their properties into the mobile Web or text messaging, whereas a ringtone is only for your phone for the most part. You’re not going to buy it online or use it for your computer. Now we’re trying to figure out the promotional opportunities.
What about the potential threat posed by mobile? How dangerous is the idea of mobile-to-mobile file-sharing?
From what I’ve heard, we’re already experiencing a bit of that threat in the U.K. and other places in Europe. I haven’t come across any Bit Torrent-type of mobile sites, but I’ve definitely come across some free ringtone sites. Hopefully, with ringbacks we don’t have to worry about that as much.
Most analysts say ringtone revenues are flattening or declining. Do you agree? If so, why do you think that is?
Mastertones have absolutely flattened this past year. I think a big part of that is the availability of too much content. There’s not enough filtering by the major portals at this point. There might be players who are good at segmenting the market, and trying to exploit the long tail, but I think a lot of that tail needs to be cut off at this point. I believe that a big part of (flattening revenue) is that there’s too much junk hiding these gems.
How else do you hope to offset those declining revenues?
We’ve seen some good traction around full-track services . and I think there’s a huge opportunity around ringbacks right now. That’s definitely developed into a steady revenue stream for us, and it’s been a viral application – there’s been almost no marketing around it. It’s very hard to brand when everybody’s talking about it with a different moniker. T-Mobile has Caller Tunes, AT&T has Answer Tones.
Mastertones are about me, about how I’m personalizing my phone. Ringbacks are about us. We’ve actually seen differences between the top ringtone titles and the top ringback titles, because they’re different types of personalization.
Apple’s iTunes has set a 99-cent-per-song standard in consumers’ minds, but that price point results in some pretty thin margins. Is there room in the value chain for carriers to make any money from full-track downloads?
I think carriers would be happy to be in a break-even around this, just like big-box retailers like Target and Best Buy. I think they’ll use music not necessarily as a loss leader, they’re probably covering their bases and making a little bit of revenue on the side.
I think carriers and mobile overall really loves music and wants it to be a part of the device. Hopefully they’ll find that price point. Once there are enough iPhones in the market, once we get to 4G and 5G, then people are going to be more apt to (adopting mobile music services).
Have the operators done enough to market their mobile music offerings? Have the labels?
All the carriers have definitely given music a fair shot, but there’s a second step that needs to happen, and that’s the educational aspect. I think there’s a general awareness out there that there’s a lot of music on the phone, but where do I go? How do I get it? And every carrier has different services. With AT&T, there’s so many things you can do with music it’s a bit overwhelming. There’s too much to do at a time, and that’s where I feel we’ve got to get back to basics instead of adding a dozen layers to the deck.
We’ve taken advantage of the interactivity (of mobile). I consider it a bit of the soft-sell process: first get somebody in, start getting them involved in that artists’ community, then start to sell to them. We’ve definitely used mobile as a way for fans to connect with the artists, with the ultimate goal being to monetize those fans with a long-term relationship. . From a marketing side, my staff has put together a promotion that lets music fans win a personalized voicemail (from an RCA artist). It’s such a simple concept but it’s hard to fulfill; it’s something that can’t be done on a carrier level.
I think ubiquity is the key. I think that’s why we need to go back and look at voice and text. I don’t think we’ve done enough with that.
So why haven’t full-track services taken off in the U.S.?
I think there are too many options (when it comes to devices). When you look to Asia, look to Japan and Korea, where there’s a likelihood that somebody’s going to go to their phone first as their media device, that’s where we’re seeing the big adoption rates. My biggest interest in mobile music doing better is teens and tweens – their first phones are now 3G phones, and a few years from now they’ll be 4G phones. If they’re getting that before they get an iPod, before they get a PC, that’s where they’re going to go to discover everything.
Many analysts believe that fragmented DRM solutions have shackled the mobile music space, particularly regarding full-track downloads. Do you agree? What’s the solution?
Good question. Hopefully, platforms like Android, with the Open Handset Alliance, are going to put a bit more of a solution to this just by making a common platform for people to go for. I hope that will get us back to talking about how many downloads we deliver, how many subscribers we have for music services on the phone, and that’s going to define whether DRM is important or not. I’m not sure DRM has been holding it back; I think it’s the evolution of the services.
How responsive are customers to your mobile efforts? When it comes to mobile, do they get it?
Oh yes. No matter what medium we message this through, everybody, 100% of users, knows how to react to that call to action. This goes beyond that interactivity. I feel like that’s been the buzzword of ’07 and ’08: interactivity. I want to make it an experience.
With an IVR (interactive voice response) prompt, all of a sudden you’re one with the brand, you’re giving an experience that’s beyond “Text here and get a ringtone.” It’s much more about connecting one on one.
Do your artists appreciate mobile as a platform for music and marketing?
Absolutely. One of the toughest things right now with an artist is figuring out how to reach (fans) .. For instance, Daughtry loves to videoblog. There’s no way I’m going to distract him by saying, “You have to leave voicemails on this other service.” If that’s how he wants to communicate, that’s how we’re going to help him.
We have a band called One Chance. There are four guys in the band, and they text each other all day. When one of them sends a text (to another), it hits all of their fans as well as the three other members of the band. Now you have this microblog that starts rolling out, and the band has really gravitated toward it.
How can the music industry leverage mobile social networking communities more effectively than it has capitalized on traditional networking sites?
We’re going to do a better job. We’re going to take the learnings we’ve had online and apply them in a
better way in mobile. What we’ve learned online is that it’s hard to market multiple profiles of your brand. I hope we can figure out ways through stuff like RSS and different technologies that apply to mobile to ingest brands into communities. So many teens I work with right now, trying to keep in touch with them is impossible. They won’t text you back, they say ‘Hit me on MySpace.’