Making a Mobile Marketplace
After years of "begging on hands and knees" before major labels and network operators to distribute his music content, Mark Bjornsgaard took matters into his own hands and teamed up with several musicians-turned-technicians to launch Jigsaw, a global content management and delivery platform that puts the artists in charge.
The Jigsaw platform enables artists to sell their music directly to mobile users and collect payment via reverse SMS text messages. Jigsaw takes a 10% commission and also rents low-cost short codes to make sure artists receive the bulk of the revenues. After a modest launch in March, Jigsaw will soon be live in 25 countries.
"The labels and the operators are caught up in a tug-of-war to control music retails over phones," Bjornsgaard, a Jigsaw joint chief executive, argues. "We're saying neither should control the content marketplace. The artists own the content and they should market it." To this end, Jigsaw gives artists the tools to sell—and even create—music products themselves. Jigsaw also plans to bring a module to market this summer that will enable artists to turn a 30-second clip of any kind of music content into a ringtone and sell it to fans. Jigsaw has plans to roll out other features including royalty accounting, virtual ticketing for gigs and concerts, and a toolbox to allow artists to design their music merchandise online.
In a nutshell, Jigsaw is a Web-based business application that sits behind an artist's Web site. Through a small iFrame—which provides a window on the artist's site that contains information on the latest offer and the price—Jigsaw enables the artist to bundle content, including demos, acoustic sessions, backstage outtakes, artwork, and video, and deliver it directly to fans from the URL. After choosing the content to buy, users receive a text message with a unique 12-digit pin code. Entering this pin into the iFrame authorizes users to download the content to their PCs and then transfer it to mobile devices. In the near future, Jigsaw will enable users to buy from and download to their mobile phones.
What's the attraction of an all-mobile marketplace? A new report from Juniper Research forecasts mobile music revenues will rise to more than $9.3 billion by 2009. While downloads of mobile ring tones and real music ring tones (also known as real tones) will account for the lion's share of the total ($4.8 billion), the market for full-track downloads is expected to increase from just $20 million in 2004 to nearly $1.8 billion in 2009. Such reports show mobile music is where the action is, and artists are looking for a better revenue split than the 60-40 deal they can get from most operators. Indeed, many artists complain that operators in countries such as Italy take a whopping 80% of revenues for content across the board.
"Putting the mobile phone at the center of this model makes it dead easy for fans to buy music, and artists to benefit," Bjornsgaard explains. And the model isn't limited to only mobile music. Talented individuals are using Jigsaw to bundle content ranging from original jokes to bedtime stories for children. "The people are in control of their content and creating bundles we'd never thought of before," Bjornsgaard says. "It's all about empowerment of the individual."
Ringing In Revenues
Another ambitious approach that allows artists to develop and deliver content across a variety of platforms including mobile comes from The Music Engine (TME), a UK-based company specializing in technology and online marketing solutions.
While most content sales schemes rely on reverse SMS (and in so doing, line the pockets of mobile operators), The Music Engine has recently launched a new online payment system that could make operators a cheap delivery pipe. In addition to allowing fans to pay for music content using credit cards, bank transfers, direct bank payments, e-vouchers, reverse SMS, and scratch cards, TME has also developed MusicPay Mobile, an online payment mechanism much like PayPal that allows users to make micro-payments and buy music directly from artists using mobile devices.
To access it, users download software from the artist site or the TME site to their mobile phones. This software allows users to purchase music using the mobile phone and pay using their MusicPay account." Users are welcome to use whatever system they prefer, but when they use MusicPay they are eligible for discounts," explains Robert Atkin, TME CEO. "The content is cheaper because users don't have to cover the 40%-50% that mobile operators charge as a merchant fee." The MusicPay solution also includes an audit trail to help artists manage the royalty accounting process and automatically pay each interested party its share of music sales.
MusicPay, which was first launched in the UK, will soon be live in China, a country where more than 90% of consumers pay cash. TME is also rolling out a worldwide system that will allow MusicPay customers to put money into their accounts via telephone, bank transfer, and through agents in local post offices and gas stations. A new process to facilitate payments from any mobile phone, which Atkin says will enable super-distribution and "payments in the playground," is planned for launch in Q2 2005.
"Artists need an end-to-end ecommerce solution to take back control of their content," Atkin says. "The opportunity is in providing the disenfranchised music owner, independent label, or newcomer artist the right tools to participate in this new marketplace."