CEO Frank Taubert on flat rates and DRM
24-7 Entertainment has powered a number of music firsts based on subscriptions, super-distribution and more. Tim Green chatted to the firm’s CEO, Frank Taubert…
What you’ve done with TDC in Denmark (see below) has attracted attention all over the world. Do you think it will be replicated elsewhere?
There’s no doubt that people are interested. We’re having conversations with companies across Europe, especially those with a triple play offer – unsurprisingly. It’s easy to imagine a company like Sky or Virgin considering the merits of subscription music and using it to strengthen their consumer offerings (after this interview Virgin Media did announce such a service – Ed).
24-7 also works with Omnifone and Sony Ericsson on their flat rate music services. It’s clearly an idea whose time is coming...
It is, and I know that operators are looking carefully at what Nokia has done with Comes With Music and Sony Ericsson with Play Now Plus. Sony Ericsson in particular likes to be supportive, but the tier one operators still want to run their own services.
Surely the big question over progress is the user experience? Mobile music has been around for five years, but the iPod and now the iPhone are still miles out in front because of Apple’s superiority in this. Do you envisage the gap being closed?
It is a difficult one. Different players with different agendas have to work together, and that’s not easy to make happen. However, we must keep working at it because mobile music has so much to offer in terms of recommendations and discovery
and location.
Would it help to remove DRM from subscription music? It’s the last taboo, but it is being entertained…
I totally believe it can succeed, especially as a mobile proposition. Clearly MP3 has proved the most convenient format for one-off downloads, and it’s time we looked
at it for subscriptions. I know discussions have taken place about it.
But wouldn’t it give carte blanche to file sharers?
It could, but I think the ISPs – who would benefit from the music subscriptions idea – could do their bit by chasing down and closing file sharing services on their networks. It’s difficult. Maybe we should trust users more.
Another idea on the up is streaming, thanks largely to the growth of Spotify. What future does it have on mobile?
It’s clear that streaming is being revived, and I think it’s partly due to broadband but also because the labels seem to be reducing the rates for licensing their music for it. Spotify’s challenge is to build a decent experience on mobile, and create something that works for operators too. I’m not sure a complete outsider like Spotify can ultimately succeed, especially with an ad-supported model. It’s so hard to make money that way.
But Apple’s an outsider. It’s done okay. And the traditional music retailers have been slow into new media, although I’m aware that 24-7 was bought by the Media-Saturn Group...
I agree that the retailers have lost ground in this space, and that they need to do something. Obviously, Media-Saturn moved by buying into 24-7, while Best Buy did something similar with its purchase of Napster. Speaking personally, our association with Media-Saturn has really improved our buying power and brought us many new relationships, so I see it as a great move for both parties.
CASE STUDY: TDC Play
24-7 and TDC, the Danish ISP, made history in March 2008 when they created TDC PLAY, an unlimited music download service. It gave mobile, broadband and cable customers access to three million tracks as part of their subscription fee.
It was an incendiary idea – all that music effectively for ‘free’. But within a year, more than 70 million tracks were downloaded and, crucially, the churn rate was reduced significantly among active TDC PLAY users. The service also helped to double the legal digital music consumption in Denmark.
In September, the partners innovated again with the addition of the first legal super-distribution service on the market to use OMA1. It gave TDC PLAY users the option to forward tracks to fellow subscribers, further enhancing the stickiness of the service.
MOBILE MUSIC NOW
Frank Taubert was among the speakers at Mobile Music Now, ME's specialist conference and networking event, which took place on July 9th, 2009. Click here for more details.
To read Part Three of our special series of features focusing on mobile music, click here.
To read Part Four, click here.
To read Part One, click here.
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