Chasing our present, asking it to help us change our future, is not going to help. Instead, the best way to predict the future is to create it. I just finished reading the book called Who Moved My Cheese: An Amazing Way to Deal with Change in Your Work and in Your Life. It’s an old tale, beautifully narrated by Spencer Johnson – one which has helped millions around the world. Can it help the mobile industry as well maybe… the one who is losing 23 billion USD to the creators of Whatsapp and the likes?
Mobile phone companies cannot survive the next 10 years by just selling 2-year contracts, minutes and SMS. But from my position as a customer, I see them dead set on a loosing strategy. Let me take SMS as an example, and here’s what I think makes Whatsapp an unbeatable competitor to SMS: 1) it’s reliable and you know when the recipient has read your message, 2) you can easily converse with multiple recipients independent of what device they have, and 3) it integrates easily with your address book. If everybody had an iPhone, only iMessage would be better! So sorry telcos… you won’t be beating this. Look elsewhere.
Back in 1996, Bill Gates prophesied that content is king: “Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting.” We all know that he is right now. We also know that those who did not master the art of adaptation have failed to make it through…
Remember Blockbuster? In 1994, it was purchased for 8.4 billion USD, calling for the acquirer Viacom’s chairman, Sumner Redstone, to call it a “global media colossus.” But it filed for bankruptcy in the United States in 2010. The most cited management mistake is its refusal in 2000 to acquire Netflix for just 50 million. Dish Networks acquired Blockbuster out bankruptcy in 2011, but finally admitted at the end of 2012 that it was scrapping its plans to turn it into a Netflix competitor.
When it comes to music, according to IFPI, “digital” now accounts to above 30% of revenue. Yet the same report, shows that despite the growth of over 8% between 2010 and 2011, this did not compensate for the loss in physical sales, and that the music industry slumped 8.7% globally (to USD 10.2b). It all started with a fight against Napster. That battle was won in 2001, but the war is long condemned to being lost.
The biggest enemy to the music and film industry is digital piracy. IFPI/Nielsen report that globally 28% of internet users regularly access unlicensed services.
The rise in revenue from digital accounts for the music industry is however encouraging. A reversal may eventually materialise also for the film industry: last year, GIA (Global Industry Analysts) estimated that the value of the movie-rental industry will rise to 4.7 billion by 2017.
But the whole point is why wait for the future to unfold when the mobile industry can be changing all of this, creating a bright future for itself and the arts? GfK reports that in 2012, phones accounted “for 17% of total time spent with the Internet across all devices, compared to 12% in 2011″. So shouldn’t this industry that’s loosing 23 billion USD a year to mobile texting applications, be investing sharply to build revenue from content and thus more time spent on the Internet?
Spotify comes to mind – “Turn your phone into a magnificent music machine with our award-winning Spotify Mobile Apps for iPhone, Android, Symbian and Windows Phone. Stream from our full library, or go offline and listen to your playlists without data charges.” says their page. The biggest inconvenience to this is that digital rights laws don’t allow Spotify to offer this service without geographical limitations.
At an investment from the telcos, of the total worth of the music and movie industries, everybody stands to benefit. Happier customers with cheap music and movies on-the-go. Telcos with a growing market propped by content which 13% of the global population spend their time on the Internet for. Music and film industries that can stop battling digital, and embrace it to the extent that it will be their main funding agent for years to come.
Here’s the proposal in figures: Should the telcos globally invest 10 b USD (the whole value of the music industry) and 4.7 b USD (the perceived value of film rental in 2017), and so 15 b USD annually, this would account to:
- The Total Global Mobile Revenues are 1.5 trillion USD and so the investment is 15b/1.5t = 1% of total revenue
- The Total Global Mobile Data Revenues are roughly $300 Billion and so the investment is 15b/300b = 5% of total data revenue
(Thanks for the inspiration M.R.)