Strategic review of digital music services market (with a focus on the mobile user). Competitor assessment, customer insights, mapping of product and experience ecosystems. Identifies opportunities for offering new services based on customer experiences. Reviews abbreviated portfolio of strategic options, and experience concepts.

1. Digital Music & Content Services
Strategic Review, Options, Experience
Concepts

2. Starting Point: SE PlayNow Portal
» Existing flash portal provides limited
scalability and functionality
Aim is to engage and excite users,
»
plus explain PlayNow proposition
Primary objectives:
Accommodate the service
»
roadmap (services and
international rollouts)
Increase awareness, usage, sales
»
Increase appeal to the target
»
audience (primarily ʻglobal youthʼ)
Improve user experience:
»
differentiation, emotional
engagement, brand expression

3. Activities To Date
» Market scan of digital content & services landscape
» Competitor assessment
» Discovery: Customer insights
» Business goals & roadmap review
» Culture & technology and shifts
» Ecosystem mapping
» Options generation for customer experience & business model
» Visualize experience concepts

4. Market Scan
Summary of market / industry research

5. Digital Music Offerings

6. Digital Music Outlook
“International digital music revenues grew by an estimated 25% in 2008 to US $3.7
billion, accounting for 20% of music sales, up from 15% in 2007
Digital growth rates vary sharply between the US and the rest of the world. Digital
accounted for 39% of recorded music sales in the US in the first half of 2008 –
more than four times higher than in Germany (9%).
The proportion of US consumersʼ disposable income spent on digital music is more
than five times higher than in Europe. Online, US broadband users spent an
average of US $12.5 on music compared to US $7.8 in the UK and just US $0.6 in
Spain (2007).” IFPI Digital Music Report 2009
If Europe follows US, exect rapid migration to digital music services.
iTunes lead is less entrenched in Europe, providing a greater opportunity
to take market share.

7. Digital Music Models
commerce subscription
Revenue Sharing Digital Music Stores
individual labels mobile radio internet radio
social music
social music
file hosting
satellite radio
Transaction
Gray market
mobile radio
streaming
streaming
Legal P2P
Advertising
social music
Loss-leader Ilegal

8. Mobile Subscriber Growth Forecast
“The China-India region will continue to be the main subscriber growth engine, with
a Cumulative Annual Growth Rate (CAGR) of 12% up to 2013” Ovum
“80 million Chinese young people to buy their first phone in the next 3 years ”
Mobileyouth.org
“Asia Pacific, Latin America and Africa will contribute 78% of subscriber growth. 8%
only from North America and Europe” Informa Telecoms & Media
“...by transforming their businesses into smart pipe service providers, the operators
can significantly increase their income from mobile content, from a share of $23bn
in 2008 to around $52bn by 2013”. Telecoms.com
Advanced services & smartphones are the growth drivers in Western markets.
Handset and subscription sales drive growth in BRIC & developing markets.

9. Mobile Data Forecast
“After years of false starts 2008 has finally seen data services take off. Data
(including messaging) revenue is forecast to grow 79% globally over the coming
five years.
Developed markets will be key to this growth, accounting for 53% of data revenues
in 2013. We do not believe that many operators will be successful in providing
content.
“(Internet domain businesses) may take content revenues from the operators, but
access will more than compensate. They also offer operators new service
opportunities through partnerships.” Ovum
Consumers will increasingly want access to ‘the real internet’ via their
handsets. Handsets / services that support this offer users value.
Operators will want to partner with services that increase subscriber data
revenue and enhance loyalty.

10. Competitor Analysis
Notable Findings: Customer Perception

11. Common Criteria
»Global and per market sales and profits
»Market shares, revenues and volumes
»Organizational structure
»Distribution system
»Advertising strategy (and spend)
»Customer profiles & attitudes
»Customer satisfaction and retention levels
»New product strategies and advertising effectiveness?
»Future investment strategy
»Contractual terms with key suppliers
»Strategic partnerships

12. iTunes Customer Experience
“iTunes sucks. There, we said it. Appleʼs once very handy
jukebox and music library manager has morphed into an
unusable piece of crap thatʼs not even an app anymore,
itʼs just a kiosk for the iTunes Store.
So, if iTunes is so flawed, why do we use it? The
answer is simple — the iPhone. There are plenty of
apps out there that can handle syncing music to your iPod,
but if you want your iPhone/iPod updates, youʼre
stuck with iTunes.”
The Top Ten Reasons iTunes Sucks
By Scott Gilbertson November 5, 2008
http://www.webmonkey.com/blog/The_Top_Ten_Reasons_iTunes_Sucks

13. Nokia Services Strategy
“...designed to appeal to users who are used to free music access thanks to
illegal file-sharing services.
However, analysts say that sales of Comes With Music handsets are failing to
meet Nokia's targets. Nokia is refusing to comment on sales figures, or the
uptake of the Comes With Music service, stating that the firm is in a "silent period".
But evidence that retailers are having to slash prices in order to sell the
handsets is mounting.
Pescatore suggests that Nokia's focus on the Comes With Music programme is
part of a plan to drive traffic to its online portal, Ovi, and establish itself as a
major player in the world of internet services.
"At whatever cost, Nokia will do its best to ensure that the product will
succeed, because the long-term goal is to drive people towards Ovi. There's
no better way for them to do that than through a service such as music that has
mass-market appeal."

14. Circular Entertainment
"From our research we predict that up to a quarter of the
entertainment being consumed in five years will be
what we call 'Circular'. The trends we are seeing show
us that people will have a genuine desire not only to
create and share their own content, but also to remix it,
mash it up and pass it on within their peer groups - a
form of collaborative social media," said Mark Selby,
Vice President, Multimedia, Nokia.

15. Circular Entertainment
Selby continues, "We think it will work something like this;
someone shares video footage they shot on their mobile
device from a night out with a friend, that friend takes that
footage and adds an MP3 file - the soundtrack of the
evening - then passes it to another friend. That friend edits
the footage by adding some photographs and passes it on
to another friend and so on. The content keeps circulating
between friends, who may or may not be geographically
close, and becomes part of the group's entertainment."

16. Comes With Music
» Application implementation is poor
» Transferring music to the handset is quick and easy
» Comes With Music concept works, execution is shaky
» Comes With Music Vs. Playnow Plus
» MusicStation works from the handset.
» Downloads are quick and the catalogue is very deep.
» However, tracks canʼt just be played
» Must be added to a playlist first

17. Comes With Music: Business Model

18. Customer Insights
Digital Music

19. Consumer Voices
We conducted a survey of active digital content buyers and mobile
device users, asking them about digital music experiences:
If you could create a
digital music service or
experience, what would
you create?

20. Summary of Responses
» This generation wants to build their own digital music experiences
» Their personal connections to their peers are a major part of their
music experience
» Active music makers expect to be able to publish, promote, and
showcase their own music
» Music should be portable: across devices, platforms, formats,
accounts, borders
» Library management and service convenience are the most important
UX elements. Discovery is important but secondary
» Scope of catalog is critical in judgements about service quality
» Comfort level with music as a social object varies
» iTunes user experience is widely perceived as having many
weaknesses

21. If it were me, I would
not reinvent the wheel, but
give people something
theyʼre already familiar with
– but packaged nicer.
“I hate having to
relearn apps when theyʼre
Users value usability and a upgraded (even simple stuff like
ʻfamiliarʼ user experience Facebookʼs redesign), if I want
to acquire music, Iʼd like to do
it via familiar method.”
Something like iTunes
but cleaner and better
organized.”

22. “Take clean and simple
"new"-factor of Hype Machine, the
community recommendations and
algorithms from Last.fm, the commercial
selling part from iTunes, make it DRM
free, make deals with all major record
companies like Sony BMG and
such Drop ALL and i
mean ALL the support
for older phones and
target it towards new
Users want the ʻbest of every phones
serviceʼ, to work together. But
are happy for it to only work on
the latest devices
Make it work
across all platforms

23. Insights: Experience Value Drivers
The value of a digital content experience is determined by peopleʼs
perceptions of overall convenience, and contextual fit.
Specific factors contribute to judgements on convenience and contextual fit.
Convenience Context
» acquisition cost » identity & expression
» price vs. effort » social
» portability » location
» format » activity
» devices » relevance
» compatibility » content, timeliness
» DRM
Contextual factors are more important to creating valuable experiences.

24. Business Goals & Roadmap
Digital Music

25. Service Offering Evolution
Digital Video
PIM
Digital Music
Games
Mobile Search
PlayNow Plus
PlayNow Personal
PlayNow Unlimited
PlayNow Discover
Localized Content

26. Arena Vision Overview
Traffic Driving Activities
Customer Experience and Value
Proposition
* Circular entertainment Hub
* CRM Hub
* Digital Retail
* Social Discovery (immersion)
* Mobile Entertainment

27. Culture and Technology Shifts
Understanding Fundamental Changes
In Media

28. Culture & Technology Shifts: Summary
Digital = Social
» Social interactions are most valued aspect of digital offerings
Co-Creation
» Customer value lies in creating content, not consuming
Digital Natives
» Young people expect all experiences to have a digital aspect
» People have multiple digital identities, managed independently
Takeaway
» Content and services are portable
» Ecosystems of integrated and complementary services
Convergence
» Mobile phone becoming primary digital device
» Experiences span channels / devices / formats

29. Digital = Social
All experiences have a ʻsocial layerʼ
» Social elements include identity, presence, history, interaction, group dynamics
Social interactions are the source of experience value
» Conversation, exchange, community, social memory, reputation
New environments are primarily social
» Social media, virtual worlds, MSO, life streams, microblogs, IM
Networks become primary organizing structures
» Interactions and experiences shaped by linked & overlapping networks of influencers
» Exchanges (information, services, goods, reputation) occur via marketplaces
MediaCatalyst. | 7

30. Digital = Social
Implications & Challenges
» Brand is shaped by interactions in the social layer
» Experience value is determined by individuals
» Perceived experience value is influenced by networks
» Communities define contexts & opportunities for marketing
» Each context is different: forums, social networks, virtual worlds, microblogs
MediaCatalyst | 8

31. Digital = Social
Opportunities for digital marketers
» Engage conversations in new social environments
» Create identity & voice for products & brands
» Respect social context when advertising / marketing
» Ensure experiences include or connect to the social layer
» Integrate & cooperate with social ecosystem
» Facilitate 2-way conversations
MediaCatalyst | 9

32. Ecosystem Mapping
Finding Opportunities In Product &
Experience Ecosystems

33. Apple iTunes Product Ecosystem

34. iTunes and iPod Ecosystem

35. Nokia Experience Ecosystem

36. Nokia Ecosystem: Strengths
» Nokia was ignoring the ecosystem of its devices, however,
this is changing .
» Nokia Home Media Solutions and Philips Streamium
Wireless Audio will cooperate to deliver a music
experience at home controlled via mobile phone, where
the digital content flies between mobile and home devices.
» The “N79 Active” was released with Bluetooth heart rate
straps from Polar and a new version of Nokia Sports
Tracker.
» Nokia and XBOX are discussing concepts that use the
same Xbox Live and PlayStation Online assets for Nokia
mobile phones

37. Nokia Ecosystem: Weaknesses
» Browser and platform dependent web services* that turn
50-75% of users away
» Weak application store with limited content selection
» Incompatible Music Store with a poorly built-in media
management and DRM-protected WMA files
» Lack of service awareness
» (also, many Nokia users donʼt know the capability of their phones)
» Lack of innovation
» Nokia hasnʼt opened a new segment on its own for years.
» Lack of user adoption and end-device support for OVI

38. Strategic Options
Portfolio of Structured Options

39. Options: Digital Content & Services Experience
• Service & Loyalty Hub
• Digital Content Retail
• Social Content Discovery
• Mobile Entertainment
• Circular Entertainment

40. • D
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Options vs. Experience Value Drivers
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ar in
En m ry
trt en
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Context
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41. Digital Content Experience Elements
1. Service
2. Mobile
3. Retail
4. Social
5. Discovery
6. Entertainment
7. Memories
8. Identity

42. Options Comparison
Service Mobile Retail Discovery Identity Memories Social Entertainment
Experience Elements

43. Option Profiles
Customer Experience
Examples Suggested
Value propositions
Business models
Ecosystem integrations TBD
Traffic opportunities
Cost
Feasibility

44. Circular Entertainment Hub
Service Mobile Retail Discovery Identity Memories Social Entertainment
Experience Elements

45. Circular Entertainment Hub
Hub offering tools and services to help share and create
common experiences with friends and family; shared
memories and individual identity are based on social Business
objects (songs, photos, videos) and, co-created digital
content. People will express themselves via common Value
objects and experiences.
Customer
Examples: Friendfeed, Facebook activity stream, iMovie &
iPhoto albums
Customer Value Propositions
» Digital identity and self-expression
» Re-inforce social connections and create common
experiences
» Social awareness
» “Stay connected to your life and your friends”

46. Circular Entertainment Hub
Business Value Propositions
» Value add component enhances product ecosystem
Business
» Engages next generation of global customers
» Source of customer social network & activity data Value
» Extends customer-lifecycle offerings
Customer
Revenue models
» Retail transactions: digital content purchase, premium
services purchase
» Loss leader (loyalty)
» Advertising
» Revenue sharing

47. Experience Concepts
Visualizing Options

48. Circular Entertainment Hub
‣ Creating social attachment to content
‣ Entertainment with an emotional connection

49. Experience Concept: Circular Entertainment
‣ Creating social attachment to content

50. Experience Concept: Circular Entertainment

51. Suggested Next Steps
1. Prioritize strategic options
2. Refine experience concepts
3. Define evaluation criteria
4. Release planning
5. Rapid prototype evaluation of option(s)