Digital marketing: Fee or free?

EMI is trialling a raft of mobile initiatives to discover what consumers will pay for and when it makes sense to give away content.

Despite the best efforts of Crazy Frog and his ilk to put off every right-thinking member of society from the alliance of music and mobiles, record labels are finding useful partners in mobile operators for promotional and commercial opportunities.

EMI, home to Coldplay and Joss Stone, is behind a number of mobile marketing campaigns aimed at learning more about its listeners. It has worked with Vodafone and more recently T-Mobile on trials of advertiser-supported mobile content, whereby consumers were offered access to free videos from artists including Lily Allen (pictured) and Robbie Williams if they watched TV-style ads that ran before and after the content.

Coke Zero, Gillette and Nike were among the advertisers involved in the T-Mobile trial, which formed part of a wider test alongside collaborators providing sports, news and entertainment content. 'We all wanted to see whether consumers would watch advertising on their mobile,' says Owen Hanks, UK sales director at mobile ad technology provider Rhythm NewMedia, which supported the test. 'This approach offers added value, and helps us get content in front of more eyeballs.'

It is hoped that as effective as the mobile phone can be for promotional work, such as advertising a new blog, it will prove equally so on the commercial front, such as selling video clips and downloads. As Dan Duncombe, head of digital media at EMI's Parlophone label, says: 'Our business is based on three-minute bites, whether it's promotional or revenue-generating, which stands us in good stead.'

The trial will help answer some of the questions that EMI has about mobile content. 'The ad-supported model is great in certain circumstances, but we're not sure yet whether mobile is the right place to put it, seeing as 3 is selling our videos for 99p a go,' explains David Gould, EMI's head of mobile sales. 'Is ad-funded going to take up the slack between 99p and free? We don't know the answer.'

However, EMI is optimistic that mobile as a whole could be a fruitful channel. 'The great thing about it at the moment is that people are used to spending money on it, so we have an opportunity to monetise our content through that,' says Gould.

Ad-funded content is not the only method the record giant is looking at in terms of generating revenue through mobiles. Having experimented with mobile marketing early on, EMI is profiting from a more direct route to its consumers, and has been able to capture valuable data and then upsell content via artist's mobile-internet sites.

A recent partnership with Flytxt saw EMI begin to use the mobile specialist's Neon platform to run campaigns that its marketers could set up and manage themselves. The platform is integrated with WAP partners, email service providers and internal CRM, becoming a hub for data. 'You can log in, access data and deliver a campaign in 30 minutes,' explains Flytxt vice-president of client services Adhish Kulkarni.

EMI has also just announced a deal with mobile media content distributer ShoZu to let artists with ShoZu-enabled phones transfer photos and video clips to a variety of websites. The idea is to allow fans to upload the content to their own sites or blogs, effectively creating a feed of artist-branded content.

One artist who has seen the benefits of embracing digital as a marketing tool is Lily Allen. She launched herself chiefly through MySpace before signing to Parlophone in December 2005. Her most recent single, Shame For You/Alfie, which launched in March, was backed by a pay-per-click mobile ad campaign. Fans could download a free animated screensaver, and instead of a traditional flat fee, Parlophone paid only for active clickthroughs to Allen's WAP store.

'Using mobile marketing we can see patterns of buying, capture data and remarket back to fans. There's a real connection,' says Julie McNally, director of mobile media agency New Visions, through which the campaign was booked. A call to action to Allen's WAP site has been included in every release, at point of sale, in artwork and in advertising. On the site, fans can access free wallpapers and voice messages and take part in competitions - all of which helps drive data capture and upsell the content on the store. The campaign has helped persuade more than 16,000 fans to register on the site.

While the most obvious sale to be made via mobiles might be songs, at the moment the data charges remain too high. 'The consumer might not realise what the size of the fee is until they get their bill and the artist would probably get the blame,' says Gould. 'That's the relationship you're trying to protect.'

Duncombe adds that this type of issue is preventing EMI from doing everything it would like. 'Mostly we are running trials to see what's working with individual artists so we can get a better idea before those barriers come down,' he says. The label also knows it must tread carefully with regard to the communications it sends out. 'This is a greater invasion of privacy because it is direct to the consumer's pocket,' says Gould. 'We've tried to apply CRM best practice and not bombard them.'

With each test campaign, EMI has developed a clearer idea of how people consume music, and how willing they are to pay for content. While the label is conscious of balancing free and paid-for content to engage those consumers and keep them happy, EMI's digital revenues have climbed, with mobile one of its fastest-growing areas; the group's revenues from mobile products increased 154% year on year in 2006.

The extent to which EMI can continue to sell content before it has to start giving it away is not yet known, but what is clear is that it will always try to sell first. 'We would rather not run a competition without an opportunity to upsell,' says Gould. 'Where possible we want people to see there's an opportunity to buy.'

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