Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks

Transcription

1 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen Wireless Telecommunications Symposium Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

2 Outline Research background Research problem Research method Results and analysis Conclusions 2 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

3 Research background Research problem Research method Results Conclusions 3 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

4 The music industry in a nutshell Mature oligopoly ( big five record labels) In 1947 six labels controlled 90% of the music industry Other s 28% Univer sal 24% In 1999 five of their successors still controlled 84% of the industry Market size: 40 billion euros annually Music = information Public good = non-rival, non-excludable Experience good Repetitive good BMG 8% EMI 13% Source: IFPI (2002) War ner 12% Sony 16% Current dominant value chain and cost structure (physical distrib.): Based on values reported by G. Prem Premkumar (2003) Declining sales attributed to online piracy (pirated digital distrib.) From physical to digital distribution models (legal digital distrib., e.g. itunes) 99 /track of which Apple gets 4 (source: BusinessWeek, April 4th 2005) 4 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

5 A taxonomy of mobile music Mobile music Music playback over portable devices Music content delivered through mobile networks Playback from physical media Digital media playback FM radio reception Music download Ringtones download Audio/ video clips streaming Superdistribution Multimedia mobile terminal mobile music capabilities 5 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

6 Mobile music: state of the art To date mostly limited to various flavours of ringtones 2002 global ring tone sales of $1.5 billion 3 rd party content providers take up vast part of the revenue Operators missed a sizeable revenue opportunity (keeping only SMS revenue) New wave of mobile music services launched from 2004 Enabled by 3G performance. Streaming (also video), Browse & download, Recognize & download, * Annouced on * FM radio * 4 GB HDD * 3G + WLAN * MP3, AAC, WMA & M4A * USB Bluetooth * 3.5mm stereo headset jack 6 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

7 Research background Research problem Research method Results Conclusions 7 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

8 Research problem Given, - Consumers are willing to pay for legal content obtained through digital distribution channels** Then, - What are the assets and barriers of mobile digital music distribution vs. digital music distribution in the fixed Internet? - How can we introduce a service that builds on these assets and minimizes the barriers? - What are the business and technical implications? - What is the role of the various key business players? - What key innovations in infrastructure and business process are necessary in order to complement application software? - Can mobile operators repeat their success in mobilizing voice telephony also for digital music distribution? ** itunes Music Store sells 3.3 million Songs in one Week (Apple press release, May 2003) 8 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

9 Research background Research problem Research method Results Conclusions 9 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

10 Research method First identify the key success factors for mobile music download Then we turn these factors into a service model We present and analyze a novel model for music download over mobile networks We study the research phenomena taking into account all relevant players 10 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

11 Research background Research problem Research method Results Conclusions 11 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

12 Key success factors Music delivery over cellular networks needs to offer something unique, or Provide a better, more convenient way of doing something that consumers are already familiar with Several available music acquisition channels existing, and Handheld devices are limited by UI, BUT how many times have you listened to a new track on the radio and couldn t wait till it was aired again? Would you be ready to pay to get instantaneously transferred to your music device at the touch of a button? 12 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

13 First order service architecture Radio broadcast Synchronized portal Synchronized online portal (including reverse channel ) Music download Radio station - online portal synchronized with radio broadcast Mobile Device - FM broadcast reception - application client -2.5/3G data -DRM client -media player Mobile Operator - 2.5/3G infrastructure - billing platform -DRM platform Content aggregation - hosting of encoded audio content Record Labels Other channels e.g. fixed Internet portals Other channels e.g. traditional retail stores 13 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

14 First order business model Radio station Synchronized portal 1. Pays bill to mobile operator, including music download fees (content + bearer charges) $ Marketing Commission 3a. commission Consumer Mobile Operator $ (bearer charges + Service commission) 2. Content fees - commission Content aggregation 3b. Royalties $ (content fees - operator commission - radio station commission - record label royalties) Record Labels $ Royalties 14 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

15 Assets and barriers Assets: - Sampling (through FM radio), download (through cellular and WLAN), store (GB HDD), manage (incl. possibility to transfer), listen (including streaming towards your favorite stereo kit), purchase (including payment) from a single device at any time, in any location. - FM radio broadcast provides the experience event, followed by oneclick download. - FM radio acts as an implicit advertising channel. No need for heavy marketing campaigns as is required currently for ringtone downloads. - Intuitive user interface (no need to browse for content) - No stringent QoS requirements (as may be for music streaming) Barriers - New business processes required. - Big players involved. - Everyone wants a slice of the pie 15 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

16 Roles and implications (1/2) Music development: Transaction cost economics. Physical distribution requires a distribution market mechanism. Record labels distort the market by over promoting a small number of works. New communication model between performers and audiences. Attenuation of biased control? Music production and publishing: Potential to become a new revenue channel. Demand for DRM schemes. Some performers may choose to bypass this step (no physical distribution channels required). Music acquisition and aggregation: Existing music aggregators from the fixed Internet. Radio stations. Mobile platform and application providers: Incumbent mobile players as well as new players are already active here. 16 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

17 Roles and implications (2/2) Network operators: Provide the wireless channel and possibly micro-payment, and single sign-on echosystem. Need to device a viable business case based on <<1 /3MB. Aim at small margins and high volumes. Role of complementary access technologies. Delayed transactions. Service providers/portals: Rise of a new class of MVNOs? Existing music brands / co-branding (e.g. radio stations, music TVs). Device manufacturers: We are getting there in terms of technical features. Role of network operators should not be forgotten! Car stereos, other consumer electronics Consumers: Ubiquity, Immediacy, Flexibility, Convenience and Personalization. 17 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

18 Multi-access Based on 3GPP(2)-WLAN interworking Content aggregators Subscriber Premises NAF BSF Dual mode Cellular/WLAN device NID DSLAM Charging machinery BRAS PDG ADSL Service WLAN AP MIP HA Internet GGSN Multi-access service core Limited coverage (delayed delivery), service fee only. Dual mode Cellular/WLAN device Wide-area coverage (immediate delivery), service fee + transfer fee 18 RNC SGSN WCDMA/HSPA Node B Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

19 Single sign-on through 3GPP GAA Avoids requiring a registration with each content provider Reduce the usage barrier HSS Zh Zn BSF NAF Ub Ua UE 3GPP Generic Bootsrapping Architecture Bootstrapping procedure 19 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

20 Research background Research problem Research method Results Conclusions 20 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen

21 Conclusions Music download over mobile communication networks will need to coexist with several other forms of music purchases Integration with broadcast radio reception as a driver for mobileimpulsive music download Volume is key Enabling technologies are already in place or will be deployed shortly Several business players involved. A lot of experimentation with various services is expected. 21 Towards Music Download and Radio Broadcast Convergence in Mobile Communications Networks Sandro Grech and Sakari Luukkainen