Monday, 18 May 2009

Mobile: marketing on the fourth screen



"Mr. Watson - come here - I want to see you." (A G Bell 1876)

My family and I just saw Coraline in 3D at our local cinema – it was absolutely fantastic. (Yes, it’s reached Europe at last!). The sound was great; no interruptions; totally immersive and escapist. It wouldn’t have been half the experience on TV. That got me thinking about screens: big and small.

Apart from our wrist-watch (maybe another blog post!) the smallest screen most of us regularly look at is our mobile phone (=cellphone). Apparently 7 out of 10 people now sleep next to their mobile phone (not sure how many of these phones are turned on).

It is generally (although not universally) agreed that the telephone was invented by Alexander Graham Bell. He was awarded the first U.S. patent for the telephone in 1876. The Bell Telephone Company was created in 1877, and by 1886, over 150,000 people in the U.S. owned telephones. In 1879, the Bell company acquired Thomas Edison's patents for the carbon microphone from Western Union. This made the telephone practical for long distances; it was no longer necessary to shout to be heard on the receiving telephone. It’s hard for us to imagine today what a change in people’s lives that was: to actually hear someone’s voice when they were physically many miles away. Bell envisaged that the telephone would be used for important things (like fire alarms or by Heads of State to discuss whether they should go to war or not) rather than for trivial chatter. But hey, you can’t win ‘em all.

But that was of course only the beginning. Today we have the iPhone: Touch screen, Voice, Music, SMS, Mobile Internet plus upwards of 30,000 apps. To mis-quote Fatboy Slim (and before him Virginia Slims cigarettes) in terms of telephony, "We’ve come a long way baby".

Today there are 1.3 billion fixed landline phones in the world.

950 million mobile phones were sold last year alone.

There are an estimated 4.1bn mobile phone subscriptions.

It is estimated that 74% of all mobile phone subscribers send and receive text messages on their phones.

There are more mobile phones than registered automobiles in the world today.

Not only is the growth of mobiles changing society in developed countries, but it is also dramatically changing the lives of people in developing countries. For instance in Kenya 1 in 3 adults owns a mobile device.

Within the next 5 to 10 years it is predicted that as much as 90% of the Earth's population will be actively using mobiles.

***A LITTLE HISTORY***
(you can skip this bit if you don’t find it as fascinating as I do).

The first mobile ‘phones arrived in the early 80s and were the size of a large brick. Above you can see Martin Cooper of Motorola with the Motorola DynaTAC 8000X which was originally launched in 1983.

Despite the bulk, it was an incredible and liberating thing to be able to take your telephone with you; unfettered by fixed lines and cables and even by the need to connect to a car battery as with previous ‘car telephones’. At first these devices were purely telephones without wires and there were problems with battery life, signal and sound quality.

The mobile phone started life as the two-way radio (or mobile rig). These were installed in vehicles e.g. taxi cabs, police cars and ambulances, although were not strictly ‘mobile phones’ as they weren't normally connected to a phone ‘network’. Although the earliest ‘mobile’ phones were installed permanently in vehicles, later versions, e.g. the transportables (or bag phones) could also be carried and used as mobile or as portable two-way radios.

The earliest true mobile telephones were dubbed ‘first generation’ mobile telephones, also called 1G. These devices were also called cellular mobile radio telephones, and were based on analogue signals.

Second generation (2G) mobile telephones were introduced in the 1990s. 2G mobile phone systems were different because of their use of digital circuit switched transmission and the introduction of advanced mobile phone to network signaling.

The birth of 2G systems saw telephones move from bulky 1G telephones to smaller hand-held items, which were much more portable. This change was made possible through technological developments including more advanced batteries and energy-saving electronics.

2G phones offered text messaging, initially on GSM networks and eventually on most digital networks. The very first machine-sent SMS text message was sent in 1991 in the UK. The first person-to-person text message was sent in 1993 in Finland. SMS messaging has become the communication method of choice for millions and many people now prefer sending SMS messages to placing voice calls.

The invention of 3G (third generation) technologies permitted network operators (e.g. Vodafone) to offer their users a wider range of more advanced services. These included video calls and wireless internet. Handsets with larger screens (first mono then colour) were launched to handle these new functionalities.

3G networks enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephone, video calls and broadband wireless data, all in a mobile environment. 3G networks are basically wide-area cellular telephone networks that evolved to incorporate high-speed Internet access and video telephony.

Ever since the birth of 3G mobile phone technology, people have been talking about 4G. This technology will point to the future of mobile phones, creating the most advanced handsets and services yet. Services to be developed include live streaming of radio and TV programmes to 3G handsets with content owners including Disney recently announcing that they'll be offering these services.
***END OF HISTORY BIT***

The iPhone, with its touch-screen functionality, has changed the game and set a new standard. Apple’s iPhone is an internet-connected multimedia Smartphone. Since its minimal hardware interface lacks a physical keyboard, the multi-touch screen provides a ‘virtual keyboard’ when necessary. The iPhone functions as a camera phone (also including text messaging and visual voicemail), a portable media player (equivalent to an iPod), and provides Internet connectivity (with email, web browsing, and local Wi-Fi). Apple announced the iPhone on January 9, 2007, after months of rumors and speculation. The iPhone was introduced in the US on June 29, 2007 before being marketed worldwide. Time magazine named it the "Invention of the Year" in 2007.

So where will the development of mobile telephony end? Of course it won’t; so maybe we should ask instead: in what direction should it go? And what are the implications for marketers?

Today, more and more people are performing a wide range of daily functionalities through their mobile phones. In major parts of Asia and Africa mobile phones have completely replaced landlines as the major form of communications, since they require less infrastructure investment and are cheaper to operate. In Scandinavia and Eastern Europe parking your car involves paying for the meter via a mobile phone. In Israel there are more mobile phones than people and in addition to texting and calling, people are using their mobiles to shop, search, pay, play as well as communicate with the rest of the world.

Mobile applications will take another major step forward with the recent introduction by Google of the Android mobile operating system. Open source functionalities will open the market up, in the same way that open source programming did a few years back for Content Management Systems, Design and programming functionalities. The inevitable proliferation of widgets, tools, functionalities and channels will drive the market for new and better handsets.

So what are the mobile phone designers aiming to achieve? I suggest a number of things:

To produce a device that feels good, and looks good
- in many parts of the world and in many consumer segments, the mobile is a status symbol which says something about the owner. Young people often define themselves by their Mobile brand and its (interchangeable) cover. The jury is out on how small handsets can (and should) be; there is a trade-off between functionality and size/weight. Full 'Qwerty' keyboards, predictive text, touch screen, flip up lids? Business or gaming? Individual consumers also have specific priorities/ requirements.

and delivers on functionality
- voice, text, camera and mobile internet. Coming soon: video/ movies. Also QR (quick response) or 2D codes (on printed items e.g. magazines, flyers, posters, even buildings) will allow us to click on the code (i.e. scan it using the phone’s camera) and go straight to a mobile website (this technique is already widespread in Japan and S. Korea).

We now await the iPhone 3.0…

For marketers, Mobile devices present new opportunities and challenges. The mobile device is ‘always on’ (albeit sometimes on silent) , and most of us carry it with us throughout our waking hours. We can receive calls, voicemail messages, SMSs, emails, Facebook updates and Twitter streams. It is a very personal device; it is shared with no-one and we normally access it “in private”. It is even more interactive than our PC (voice is a powerful functionality!). On the downside, screen and keyboard size are limited.

UK Mobile Ad Spending doubled in 2008 (IAB = UK Interactive Advertising Bureau). This has big implications for the media industries in general, and advertising in particular. The recent big growth opportunity in advertising has been ‘online’ i.e. internet advertising (which now accounts for about 10% of the total global ad spending) and which has recently been gaining share at the expense of traditional mass media ad spend, with TV and magazines hard hit and newspapers really struggling. Let’s remember though that mobile is still only a tiny sliver of all interactive ads and represented only about 1% of the total global ad spend last year.

We can expect the national mobile ad spending numbers in advanced European mobile markets to echo UK numbers (Spain, Italy, Finland, Sweden, Austria, Ireland etc) and the other European markets (Germany, France, Switzerland, Poland etc) to follow a little later.

There are markets where mobile advertising is far more advanced than in the UK both in the types of ads, as well as in the proportion of the national ad spend. Japan and South Korea are clear global leaders here; Spain is well ahead of the UK as Europe's most advanced mobile advertising market. There are also ‘unlikely’ countries where the proportion of national ad spending on mobile is far ahead of that in the US and UK - India for example. In India the reach of internet based interactive ads is very limited, so from very early on, the Indian ad industry has reached for the mobile as an interactive channel; India has been very successful in developing advergames for mobile.

Nokia has famously dubbed the mobile phone “the fourth screen”.

Should content providers and advertisers seek to replicate the internet experience we have at our desks for mobile users? I suggest not.

After all, why do we still go to the movies? Big screen, great sound. Great all-round experience (better 3D and tactile sensations may be next). We don’t, in general, eat our dinner in the cinema and we can’t pause the movie to go to the bathroom. Equally, our laptop can go with us on the train or to a client’s office. I suggest for the foreseeable future, there will be distinct roles for Cinema, TV, PC/laptop and cellphone.

In the future, these devices will no longer be called 'cellphones'; they will be 'handhelds' or even 'communicators' (well it was good enough for Captain Kirk). Of course they are already computers; indeed today's high-end Smartphone can surpass the performance of a mid-range laptop computer of only 5 years ago. 4G networks promise ubiquitous fast mobile broadband connections, opening up all kinds of new mobile experiences.

So let’s not force mobile into a box labelled 'mobile internet'. Mobile is different and should be approached differently: used for what it is good at. On a small screen, people don’t want to read large amounts of text and, for my money, they won’t want to watch movies. Quick clips and small chunks of text: news headlines, weather forecasts, sports scores and pop videos being typical items. And let's not forget LOCATION. By definition, these devices are used on the move; location dependent content is highly relevant.

Advertising on mobiles should also be different from TV or PC-web: consider the user experience and situation and don’t ask people to do anything fiddly or requiring a lot of reading; a short mini-clip or an ‘awareness banner’ with a single click response is about the limit. Mobile is good at short messages- chunks of content. ‘Click to call’ is very powerful. So is anything dependent on location (where are my friends? The nearest restaurant? Subway station?). Mobile is great at some things and less good at others; as marketers we need to understand this and work with it. There is room in most people's lives for a range of screen sizes; we expect something different from each. After all, if mobile devices could do everything, we wouldn’t need laptops. Or cinemas.

"If you had come to me a hundred years ago, do you think I should have dreamed of the telephone? Why, even now I cannot understand it! I use it every day, I transact half my correspondence by means of it, but I don’t understand it. Think of that little stretched disk of iron at the end of a wire repeating in your ear not only sounds, but words—not only words, but all the most delicate and elusive inflections and nuances of tone which separate one human voice from another! Is not that something of a miracle?" Sir William Crookes, 'Pall Mall' (Jan 1903)

In many ways the mobile phone is miraculous. However: (and you may call me a dinosaur if you wish) I'm not planning to watch Coraline on my iPhone any day soon; thanks anyway (and that's not just because the 3D glasses would be a pain to carry around with me).

Friday, 8 May 2009

Video/ audio piracy: you hum it and I'll share it



Do you download music? If so, do you pay for it? Amazon, iTunes Store and Napster, among others, sell music downloads; simple to use, fast and legal. However it is estimated that 95% of music downloads are illegal. (IFPI 2009)

Recently four directors of the Swedish file sharing website, The Pirate Bay, were arrested, found guilty of ‘aiding and promoting copyright theft’ and sentenced to jail. There are powerful interests opposed to file sharing of music, TV and Movies.

In a simpler age, Sir Paul McCartney sang "You never give me your money". But in fact millions of people did, and plenty are still doing so; he recently pronounced the Pirate Bay verdict to be fair. However in a previous interview, Sir Paul (almost) admitted he would have ripped off music by Elvis and his other heroes if he’d had access to today’s technology back in the day (and I don’t think he meant that would only have applied to a few ‘scouser scallys’ either...) Herein lies the dilemma; is theft of IP the same as stealing money? Or a car? Or a DVD? Just because it's possible and un-policeable, should the copyright owners (music labels, movie studios, artists et al) give up and find another job?

Indeed, why should everything on the internet be free? Shouldn't talented people be able to earn a living by entertaining others? If not, who will choose to be: Actors/ Producers/ Musicians/ Journalists? Next time our mate offers us a memory stick/ DVD loaded with pirated content in the pub, should we pause to consider whether we may be stifling the career of the next Lady GaGa (actually, on second thoughts...OK bad example.) MySpace Music, and new sites like Spotify, Last.fm (as well as smaller rivals e.g. Deezer, Qtrax) are rewriting the rule book. Many questions remain: will advertisers support the new legal sources of free music? Will consumers accept some ads as their price for getting their favourite music for nothing? Will the premium services sell?

Of course the music labels were in a difficult situation; the technology moved so fast that they lost the initiative and lost control. So did they give up or fight? The former was commercial suicide and thus not an option. But how to fight? The internet is not going away. File sharing will only get easier. DRM (Digital Rights Management) is both universally hated and fraught with difficulties (e.g. how many computers can you download the protected track onto? If 3 computers, is this admitting that you and 2 mates can have the song for your 79p? What happens if your laptop is stolen or your hard drive crashes?) So, perhaps the best alternative model is that you pay once then the music is yours forever. The retailer (e.g. Amazon or iTunes) is tacitly accepting that you will share with your mates but at least ONE of you has paid! DRM-protected music is now effectively finished, with both iTunes and Amazon’s MP3 download service abandoning it. Some would say the Music Industry, under pressure from market forces, has at last accepted reality.

Strange things are happening at the moment. Madonna has done a ‘360 deal’ with concert promoter Live Nation; recorded music sales are way down the list of the ways she will make money. Radiohead invited us to decide how much we wanted to pay for In Rainbows (I still feel uncomfortable about what I paid, but I don't think I should, having paid top-dollar for their previous albums). Lily Allen, Kate Nash and the Arctic Monkeys broke on MySpace and YouTube. will.i.am happily gives his music away and makes money from touring and merchandise.

As we have noticed, there is a recession right now; indeed Sir Elton John and Sir Paul McCartney each just lost £60 million of their net worth. But we shouldn't worry about these Rock Knights. They've made their money and they can make more from touring, advertising, publishing, sponsorship and merchandise.

There is something much bigger going on here than the current recession. It’s the new up-and-coming acts who might just find it too tough to break into the mainstream i.e. to make it pay so that they give up and as a result less new music is made and all we are left with is the Knights’ back catalogue, Sir Cliff’s latest Christmas Single (on mp3 and vinyl naturally) and the winning song from the latest TV talent contest.

Currently, what has happened in Music currently shows few signs of happening in TV/ Movies. The movie and TV studios are currently fighting tooth and nail to stamp out piracy; they want you to go to the Movies, buy the DVD, or at least rent from someone who has bought it. Maybe they will move their position once people stop buying DVDs as they have done with CDs. Until then DRM is very much alive as regards video content. DVDs now come with an anti piracy warning; “You wouldn't steal a car...handbag...mobile phone...piracy is theft” etc. Strong stuff.

Throughout history, technological change has caused upheaval and conflict, as established structures, industries and personal fortunes are threatened and even wiped out. The Luddites fought against mechanization of the mills. There was a powerful lobby defending the canal industry when it became threatened by railways. However machines and railways won. Today, Newspapers and Travel Agents are struggling as consumer habits change. The internet has compelled the music business to re-evaluate its business model; once again technology has forced changes in the economy and indeed in society. Maybe the movie business is next. As we all know, the internet is a powerful agent of change and it seems certain that we "ain’t seen nothing yet".