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MTV Dials in Deal With Universal Music Group
By Charles Duhigg Los Angeles Times
Undeterred by a lack of consumer interest in using cell phones to access entertainment, Universal Music Group is expected Tuesday to announce a deal giving MTV Networks a blanket license to its songs, videos and other media for creating mobile content.
The deal is the latest example of the entertainment industry’s appetite for using cellular phones to deliver content. EMI Music and T-Mobile struck a deal Monday to offer ad-supported mobile video in Britain. In the past 16 months, according to one report, cellphone carriers have earmarked at least $1 billion to develop mobile content.
Universal Music, the world’s largest music company, represents such artists as Mariah Carey, Eminem, U2 and Kanye West, while MTV Networks, a unit of Viacom Inc., targets young audiences through its collection of cable channels including MTV, Nickelodeon, Comedy Central and VH-1.
Although music companies and programmers for years have expected mobile content to revive their industries, American and some European consumers have shown only tepid enthusiasm for programs airing on 3-inch screens or for music downloads that typically cost more than those available for 99 cents online.
“Probably only 1 percent of cell phone owners regularly consume mobile videos and songs,” said Neil Strother, a wireless analyst with the NPD Group, a market-research firm in Part Washington, N.Y. “And it isn’t growing very fast, largely because of a lack of awareness. So in that respect, deals like the Universal and MTV agreement show that major companies are aligning to push mobile content. That’s an important first step, but there is still a long way to go.”
Consumer indifference has hindered efforts by major companies to jump start the mobile marketplace. Cable sports channel ESPN, a division of the Walt Disney Co., launched a cellphone unit amid much fanfare at this year’s Super Bowl, but the division has failed to live up to expectations, according to company insiders. Amp’d Mobile, a cellular content start up, raised more than $250 million from investors including MTV and Universal Music. But fewer than 10,000 subscribers have signed up in the service’s first five months, according to analysts.
Beyond awareness, the biggest hindrance is that most shows and songs available for download can be purchased at lower prices through other venues, such as Apple Computer’s iTunes Music Store or in physical form on DVD or compact disc.
The MTV-Universal partnership hopes to overcome that obstacle by creating exclusive content for cell phones.
“To build an appetite for mobile content, there have to be video clips and shows and songs that you can only get on your phone,” said Rio Caraeff, a digital executive with Universal Music. “We want to spur the creation of those clips by making our entire catalog available to MTV. The industry has to push our products in front of people, instead of waiting for them to ask.”
Caraeff said Universal Music would complete blanket licenses with other mobile content creators and cellular carriers, and that rival music companies probably would follow suit.
The terms of the deal with MTV were not revealed, but sources close to the negotiations said Universal Music will receive a payment each time one of the company’s songs or videos is used in MTV’s mobile programming. And unlike before, when MTV needed permission for each song it used, the deal will allow the cable giant to offer any Universal Music video to mobile consumers, and to deliver clips of live performances and made-for-mobile programming using Universal Music songs.
Cellular consumers typically must pay for individual downloads, or subscribe to a video service at additional cost.
The EMI and T-Mobile agreement will let U.K. cellular customers download music videos by EMI artists free of charge, but will require they watch a commercial by an advertiser such as Coca-Cola or General Motors.
MTV, which has deals with multiple cell phone carriers, is betting that unique content will revitalize the network’s relationship with young consumers. The music network, which once dominated the teen audience, has stumbled online, loosing out to new companies such as YouTube and MySpace. Executives say that producing one-of-a-kind shows will establish a competitive advantage.
“Mobile is very important to us,” said Greg Clayman MTV Networks’ vice president for Wireless Strategy and Operations. “The more quality content that exists from brands people trust, the better the marketplace. The way to draw new mobile viewers is to create clips that have a buzz factor, and this deal gives us a free hand in creating amazing new content.”
By Charles Duhigg Los Angeles Times
Undeterred by a lack of consumer interest in using cell phones to access entertainment, Universal Music Group is expected Tuesday to announce a deal giving MTV Networks a blanket license to its songs, videos and other media for creating mobile content.
The deal is the latest example of the entertainment industry’s appetite for using cellular phones to deliver content. EMI Music and T-Mobile struck a deal Monday to offer ad-supported mobile video in Britain. In the past 16 months, according to one report, cellphone carriers have earmarked at least $1 billion to develop mobile content.
Universal Music, the world’s largest music company, represents such artists as Mariah Carey, Eminem, U2 and Kanye West, while MTV Networks, a unit of Viacom Inc., targets young audiences through its collection of cable channels including MTV, Nickelodeon, Comedy Central and VH-1.
Although music companies and programmers for years have expected mobile content to revive their industries, American and some European consumers have shown only tepid enthusiasm for programs airing on 3-inch screens or for music downloads that typically cost more than those available for 99 cents online.
“Probably only 1 percent of cell phone owners regularly consume mobile videos and songs,” said Neil Strother, a wireless analyst with the NPD Group, a market-research firm in Part Washington, N.Y. “And it isn’t growing very fast, largely because of a lack of awareness. So in that respect, deals like the Universal and MTV agreement show that major companies are aligning to push mobile content. That’s an important first step, but there is still a long way to go.”
Consumer indifference has hindered efforts by major companies to jump start the mobile marketplace. Cable sports channel ESPN, a division of the Walt Disney Co., launched a cellphone unit amid much fanfare at this year’s Super Bowl, but the division has failed to live up to expectations, according to company insiders. Amp’d Mobile, a cellular content start up, raised more than $250 million from investors including MTV and Universal Music. But fewer than 10,000 subscribers have signed up in the service’s first five months, according to analysts.
Beyond awareness, the biggest hindrance is that most shows and songs available for download can be purchased at lower prices through other venues, such as Apple Computer’s iTunes Music Store or in physical form on DVD or compact disc.
The MTV-Universal partnership hopes to overcome that obstacle by creating exclusive content for cell phones.
“To build an appetite for mobile content, there have to be video clips and shows and songs that you can only get on your phone,” said Rio Caraeff, a digital executive with Universal Music. “We want to spur the creation of those clips by making our entire catalog available to MTV. The industry has to push our products in front of people, instead of waiting for them to ask.”
Caraeff said Universal Music would complete blanket licenses with other mobile content creators and cellular carriers, and that rival music companies probably would follow suit.
The terms of the deal with MTV were not revealed, but sources close to the negotiations said Universal Music will receive a payment each time one of the company’s songs or videos is used in MTV’s mobile programming. And unlike before, when MTV needed permission for each song it used, the deal will allow the cable giant to offer any Universal Music video to mobile consumers, and to deliver clips of live performances and made-for-mobile programming using Universal Music songs.
Cellular consumers typically must pay for individual downloads, or subscribe to a video service at additional cost.
The EMI and T-Mobile agreement will let U.K. cellular customers download music videos by EMI artists free of charge, but will require they watch a commercial by an advertiser such as Coca-Cola or General Motors.
MTV, which has deals with multiple cell phone carriers, is betting that unique content will revitalize the network’s relationship with young consumers. The music network, which once dominated the teen audience, has stumbled online, loosing out to new companies such as YouTube and MySpace. Executives say that producing one-of-a-kind shows will establish a competitive advantage.
“Mobile is very important to us,” said Greg Clayman MTV Networks’ vice president for Wireless Strategy and Operations. “The more quality content that exists from brands people trust, the better the marketplace. The way to draw new mobile viewers is to create clips that have a buzz factor, and this deal gives us a free hand in creating amazing new content.”
Guess we'll have to wait and see.
