full-track – On Technology and the Future: Education, IoT, AI, Mobility, Games

English newspaper The Guardian published the results of a couple of recent surveys on mobile content, including the quarterly “Orange Digital Media Index” and a study carried out by TNS and, alas, no real surprises here:

Ringtone and wallpaper downloads are slowing and are on the decline and, frankly, who in their right mind with a phone that plays MP3s, has a good camera as well as multiple connections to a computer, would spend money on such little gimmicks anymore? Ringtones were down more than 10%, whilst wallpapers still grew but at a meager 3%.
Full-track downloads of songs though were on the rise — 292,000 in January on Orange UK compared to only 100,000 ringtones.
SMS are going strong (up 21% or 1.3bn for the month in the UK) according to Orange, a number to which I, through my 12-year-old son’s phone bill, contribute no small share…
TNS believes mobile IM is on the rise but this is not really the big thing. What IS the big thing is that, according to TNS, more than 1 in every 3 messages a user sends from either his/her mobile OR computer are SMS (38%), and that shows how ubiquitous the whole thing has become. Again, judging by my son’s communication patterns, I believe that: his choice of messaging is – in order of relevance: 1) SMS, 2) IM, 3) (and I mean a very, very distant 3) e-mail.

So pretty much all as expected. Unfortunately, no news on mobile video, games or applications in this one although this is there might actually have been interesting things to report. I am actually wondering now why I even bothered recording this at all… Apologies…

LiveWire Mobile (part of Nasdaq-listed NMS Communications Corp) acquired former ringtone and now full-track platform provider Groove Mobile for $14.5m in what commentators call an “unexpected swoop” (why? because they waited with the PR until the deal was closed?).

Groove Mobile runs the music decks for 12 carriers, including most notably Sprint in the US and 3 UK. It also holds contracts with all major music labels.

Now, why should this be unexpected? The press release lays out the “strategic reasons” for the acquisition and, whilst it is all a bit embellished in the usual PR blurp, it is relatively plain to see: LiveWire Mobile are – or so I understand – specialising in ringback services (their website says they are deployed on 30 carriers with that). However, those carriers do not seem to give them too big a footprint: the release states that the acquisition triples their “addressable market”.

Also, ringbacks are a bit of a beast to run as they require deep integration with the carrier on which it is deployed (you need to be on network level to integrate this), and the relationships of a company that runs the music platforms for some carriers are naturally quite valuable to someone like that (although someone still needs to explain to me what turn-key means in mobile telecommunications terms). So: you get someone who is already integrated with a carrier, you increase your chances that that carrier will choose more services from you. Compelling, huh?

If it is a good acquisition remains to be seen: ringbacks are utter flops in some countries (people query the value of a service that the person paying for it never experiences…) and huge hits in others; not consistent though… Also, digital music distribution seems to be a field with utterly low margins; great if you can deliver VERY efficiently and to enough consumers but tough as you always face margin pressure from every side you are involved with: the labels that are struggling to replace retail sales and the carriers (and, increasingly web players and OEM) who want to be amply “reimbursed” for allowing you to sell to their customers. If the above considerations can deliver, it should have been a good buy: at about 2 x revenues, it was at a relatively sane valuation multiple.

Good luck, folks!

Tag: full-track

Ringtones, Wallpapers & SMS in the UK

LiveWire in the Groove