It is now the case that all the all the mobile network incumbents and a large proportion of the handset manufacturers are offering some kind of music download service.  Nokia have their “Comes with Music” which gives users the ability to download and keep an unlimited number of songs for a set price every month. Orange has teamed up with T4 to create the “Music Monkey” service where pay as you go customers are entitled to get access to hundreds of thousands of albums and singles. Vodafone has had an established music service for some time. It allows you to own individual tracks from 48p, the most you’ll pay is 99p and get full albums from just £4.99. They also have an unlimited service for £4.99 per month which gives access to 1.6million tracks.

This is just a broad cross section but you will get the general idea. These companies are basically giving music away and as yet I am struggling to see how it will be possible to remunerate any artist for the distribution of their music via this business model. It is obviously the case that licensing deals and fees have had to be negotiated with all relevant labels in order to supply music to their services. This will be generating some revenue for the labels but what about the artists? If for example out of the average £5 per month charge for unlimited downloads and the average person downloads 50 songs,  with label fees and the mobile company cut an artist would be considered lucky to earn 1p!

At a mobile music lecture some months ago an industry veteran posed a very interesting question to the heads of mobile music for Vodafone and Nokia. He asked why neither of these companies had decided not to invest any money in artists but continued to reap millions from their creative endeavours. He was of course met with silence and quickly brushed off. I think he raises a valid point. These firms have resources to help develop new artists. Not only do they have the money, something that most labels are struggling with at the moment, they also have a solid route to market with their captive audience to distribute the music to.

I think the main reason behind the silence was because of the realisation that these guys actually know very little about music. They may have a solid understanding of the number of users they have subscribed to their music services and how much revenue their music service generates but they do not actually have an appreciation for what it is that actually goes into making the product they are delivering. They do not understand the hours that it takes sitting in a room with a guitar or a piano waiting for that riff to drop out of the ether or the feeling of listening the final mix of a track that has been months in the making. This is relevant because it means that they are completely incapable of placing a value on an entity that is not entirely understood by them.

Maybe the only way to redress this current imbalance would be for the mobile companies to start buying up labels. Perhaps the sale of EMI’s recorded music division to Vodafone would be a start and it might actually provide a realistic exit strategy for venture capital firm Terra Firma that currently own it.