In a region where you can buy a high-quality pirated DVD for just a few dollars while stopped in traffic, getting people to pay more than $2 for one mobile full-song download seems like a hard sell. But carriers and labels are betting that more flexible pricing, aggressive marketing, faster networks and a wider music selection will help them move more over-the-air full tracks in Latin America in 2009.
Both major regional carriers, Telefonica's Movistar and America Movil, have had full tracks available for sale in certain countries since 2007, but getting the mobile business to take off has been a work in progress. Warner and EMI were the only major labels selling full tracks in America Movil's Ideas Music Stores, though Universal said it was expecting to sign an agreement to sell full songs through Mexico's Ideas Telcel stores shortly.
Movistar began more strongly promoting full tracks from all four majors in 2008 and plans to launch third-generation networks in all of Latin America in 2009.
"3G is nothing without content," says Mosiri Cabezas, Movistar's head of content for Latin America. "We invest a lot in the network and we, as a carrier, want to get the most out of it through our services and evolve those services to generate more revenue.
Movistar is counting on a response to revamped music stores with a more user-friendly interface, such as those it recently launched in Mexico and Colombia. As it rolls out its 3G networks throughout the region, Movistar will offer full tracks everywhere from Central America to Venezuela to Uruguay. (America Movil also sells them in at least nine countries.)
Movistar is experimenting with pricing (88 cents per track in Colombia, including transmission costs) and marketing through Sello Movistar, a label that will sign indie artists in various Latin countries. Those artists will be selected from profiles posted to artistasmovistar.com and will be chosen for tour support, promotion through Movistar's digital music stores and sponsorships.
Movistar says that regional revenue from music downloads (including everything from ringtones to full tracks) went up 20%-30% between 2007 and 2008.
Though Nokia wouldn't confirm at press time whether it plans to usher in its Nokia Music Store in Mexico next year, it recently introduced two new music phones in Mexico that are compatible with the store in preparation for launch.
Juan Paz, head of research for digital media consultancy Music Ally, says mobile music download revenue has grown considerably from what it was and carries "huge potential." But compared with ringtones, "it still is a very limited stream of revenues. Not many people understand how this works, so extensive—and expensive—marketing will be required." So will prices that will appeal to more than the region's wealthy.
But labels and carriers are betting that consumption habits are changing. "It's more about ingraining the habit and having more handsets with [advanced] capabilities," says Sergio Lopes, EMI's VP of marketing and digital development for Latin America. Warner Music's director of new media for Latin, Alfonso Perez-Soto, says the label expects "exponential" growth.
Both say that download prices—which vary widely from country to country and depend on whether transmission costs are included, as well as whether the download is prepaid or billed later—are not the biggest factor getting over-the-air tracks to sell. "What's important is that the navigation is easy, that it has a good marketing strategy," Perez-Soto says, adding that prices should reflect the difference in the physical world between front-line and catalog titles.
But labels don't set prices—carriers do, depending on each country's economic circumstances, average revenue per user and the competition. In Colombia, a track from America Movil's Ideas Comcel store, which launched in early 2008, came to about $2.45 in early January.
Felippe Llerena, executive director of Brazil's iMusica, which runs the back end for Ideas Music Stores throughout the region, expects transmission prices to go down, particularly when fast 3G networks come to dominate and carriers can get paid for transmission of data over 3G as part of an overall plan instead of per download.
In Brazil, "most of the people who have computers have broadband access, and they have been pirating the music for free. And then you have the other portion of the population that has never accessed the computer at all and now has a cell phone with a music store inside. So they became our best customers."
Besides improving mobile store offerings, Llerena has built a business around brands paying for online downloads and giving them away to consumers through PIN codes inside their products. Llerena says he will bring that strategy to mobile soon. "People will be willing to pay for music again, as long as they don't perceive that they are paying for music," he says. "We have to seduce the consumer again."
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