Ringtone store represents new relationship between content providers, cellcos: CHUM

A deal between the three largest Canadian cell phone providers and CHUM Television Interactive to put a MuchMusic-branded store on mobile devices seems to signal a new approach by the previously guarded cellcos towards working with content partners. On January 27, CHUM announced a partnership between itself, TELUS Mobility, Bell Mobility and Rogers AT&T Wireless to sell ringtones via the shop.muchmusic.com wireless web store. CHUM Television Interactive VP Roma Khanna tells Canadian NEW MEDIA that while a ringtone may sell for only $2.50 or less, the significance of the new partnership lies in the breadth and number of players who collaborated to make it possible. "I can tell you from the business perspective it took a lot of people coming to the table and agreeing that not only is this a good idea but to have the vision on why this is a good idea," she says. "To have the vision that it’s important for brands like MuchMusic to be able to reach out to their audience and that doing so under that brand makes sense. Our carrier business partners in this venture have their own ringtone store and it would have been easy for them to say, ‘that’s where we sell ringtones and that’s where the billing and all that strength will be focused.’ But they have the vision of things. They know it makes sense for us to reach out to the marketplace under our own, other brand and to offer this to our customers, to enrich their customers’ experience with the cell phones and wireless content. That’s not a small step. That was a big leap for us all to say, ‘you know what? This is a good idea.’" Content producers have for years chafed at the control exercised by the carriers over their networks even as new technologies such as short messaging service (SMS), chat, and even wireless access protocol (WAP) have been touted by cellcos as potentially huge revenue generators. But, says Khanna, a new day appears to be dawning. "It’s been fantastic. (The carriers are) really interested in using mobile technology as a medium for the content industry. This is, honestly, the first step. You’ve got to keep watching CHUM…That’s just the beginning. It’s video over wireless, it’s on demand content, streaming video over wireless. This stuff is coming and it’s coming in the relatively near future. So keep your eyes out. It should be fun." To develop the online ringtone store, CHUM worked with wireless content integrator Sharp Robot to broker the necessary content licensing deals, as well as work out the technology behind integrating the TELUS, Rogers and Bell systems. Khanna offers no explanation when asked why Microcell Telecommunications Inc. - known in the market as Fido and Canada’s fourth national player - isn’t part of the deal. "Our goal would be over the next couple of months you’ll hear announcements that everybody in Canada who has a cell phone that can take this kind of content should be able to buy from shop.muchmusic.com," she says. While the online ringtone store bodes well for future content provider/cellco initiatives, roadblocks remain. A key technology that has shown great promise thus far has been SMS cell phone short codes - five- and six-digit codes that replace lengthy tele-phone numbers and allow users to send and receive text messages with larger content providers. The codes could usher in a host of new voting applications and other interactive initiatives, but the process for acquiring a short code is still described as difficult and the codes may only be held for a short time. CHUM has already used SMS and short codes in several campaigns but Khanna is looking forward to a day when they become easier and less costly to use. "The SMS systems need to be such that the company would have our own short code and we could pull the trigger whenever we want…Now, to the credit of the carrier companies, they recognize that and they’re working very hard to figure out a system, especially with partners they’ve worked with before that they know are reliable, responsible partners, and that aren’t doing spam SMS/text messages to their customers. They’re going to make that faster, but short codes are still expensive, and they can be cost-prohibitive, so we need to use them as much as possible to amortize the cost of the short code. I believe the cost of the short code needs to come down. We need to really integrate this with our business so we can all make money on the other side of the transaction, not this up-front fee...I think a permanent short code is the answer. It’s like a phone number that over time - the number itself becomes a brand to our television properties." Khanna says the company is already turning a profit on the initiative, and that the recording industry should view the field as a potentially important new revenue source. "The numbers are phenomenal. It makes sense, but at the same time, what (users are) paying for is a very short loop of the song, that plays on one device. It’s not a mobile MP3 player…and they see the value proposition and it makes sense for them and they’re paying for it. For half the price, they could buy that song from Puretracks and have it on their MP3 player and burn it to a CD and have it on their computer, and they don’t do that to the same extent. It’s a different perception of value, and that’s really interesting and unfortunate. But I hope that ringtones are actually something that can help the record industry and become an integral part of what they do."

Ringtone store represents new relationship between content providers, cellcos: CHUM

Broadcast | February 6, 2004

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