Vodafone Spain this week introduced a new music strategy built around data plans that include unlimited access to mobile music for 12 Euros, or about $16, per month. The logic behind the relatively inexpensive unlimited plan is that if Vodafone can accelerate data penetration, it’ll make more money than from a pay-per-song model, according to RealNetworks chairman and CEO Rob Glaser.
“We are trying to get the music industry to move away from a per-unit view to an ARPU model,” Glaser said. The iPhone has had an influence disproportionate to its relatively small global market share, he added, leading many operators to believe paying per song is the best model for music.
RealNetworks powers Vodafone’s music service in Spain and nine other countries, in addition to 11 other operator’s offerings across Europe and Verizon in the U.S. In addition to its unlimited service, Vodafone recently began offering digital rights management-free songs that can be delivered to a range of mobile phones and PCs without side loading or synchronizing. It partners include Universal Music, Sony Music Entertainment, EMI, Warner Music and several independent record labels.
Vodafone is making more than one million songs available as unprotected MP3s to customers, meaning they won’t be restricted to any particular device. Customers who’ve already purchased DRM-protected music from Vodafone have the opportunity to upgrade it to MP3s for free, which is something Apple charges for on iTunes. Although Vodafone’s subscription service retains the tracks’ DRM so that consumers cannot keep their songs if they cancel their service, it’s an important move for the music industry, which according to Glaser, has typically let a fear of cannibalization drive its business model of paying per DRM-free track.
Glaser pointed to college kids to whom music is central, but piracy is thought of less like stealing and more like jaywalking. He said his message to music labels is that by embedding in the fabric of digital, they can drive revenues in much the same way the Amazon Kindle has monetized content that is otherwise already available free on the Web.
The problem with a service like Nokia’s Comes With Music, Glaser added, is that it is asking consumers to pay too much up front. In his opinion, the best model to drive mobile music is a plan, like Vodafone’s, that includes a device that does not cost more, but comes with a required data plan that includes music. The model definitely hasn’t made its way to North America yet, but Europe tends to be a Petri dish for wireless experimentation. Considering this, flexible enough economics to allow carriers to do bundled data plans with music will come to the U.S., Glaser said, but it will take a few years.
