MP3 formats challenge music industry

NEW YORK – Varying MP3 devices and music file formats are creating new challenges for the music industry as labels look to sell more songs online and on mobile phones, according to speakers at the “Digital Music Forum East” conference Feb. 27-28 at the Museum of Jewish Heritage.

Matt Schwartz, manager of music opportunities and business development at Verizon Wireless, discussed consumer challenges with the browsing experience when shopping for music on mobile devices.

“Right now, in the best-case scenario, when the consumer knows exactly what they want and how to use the service, it takes about five clicks to complete a purchase for a song,” Mr. Schwartz said. “We’re trying to move into less clicks because for every extra step it takes, you lose 20 percent of your audience.”

John Burris, vice president of wireless data at Sprint Nextel, agreed.

“The real crux is how to make this simple on a handset,” he said.

In another panel – “Device and Format Wars: Who Will Be the Winners and Losers?” – executives from various online music sites talked about the challenges of selling to consumers who own multiple devices.

John BaRoss, vice president of global sales and strategic development at Click and Buy, the payment platform that powers Apple’s iTunes and AOL, said the marketplace is challenging because consumers own multiple devices that are not always compatible.

“Consumers want to be able to listen to songs that they have bought across devices and not have to buy [them] again,” he said. “But we will have to come up with new ways to create revenue if consumers share open MP3s.”

Despite these challenges, music business executives are excited about the potential of the growing digital marketplace since downloads and ring tones continue to show profitability.

“We are working with artists to try and develop content that is intended to play specifically on phones,” said Rio Caraeff, general manager at Universal Music Mobile.

In the “Social Music Discovery” panel, Ali Partovi from iLike Inc. talked about community as part of the listening experience.

“Music discovery is a communal activity and we wanted to bring that community aspect to the iPod listening experience,” Mr. Partovi said.

ILike is a free service that lets users create profiles and share play lists and song recommendations with friends. The software creates a sidebar in iTunes and lets users view friends’ playlists in iTunes.

The service, which already has 500,000 users, is not yet revenue-driven but the firm has formed partnerships with Ticketmaster and others. It also plans to link relevant advertising to users’ playlists.

Kevin Barenblat, co-founder and CEO of Spot DJ, a service that adds music history audio clips to the iPod, also discussed the important role that community plays in the music listening experience.

“We wanted to enhance the listening experience that you have when listening to radio shows or watching music video shows,” he said. “Our platform lets you synch DJ broadcasts about your favorite band with their songs. You can hear Taylor Hicks talking about American Idol and Ben Fong-Torres speaking with the Doors’  Jim Morrison.”

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