UMG: Mobile now close to half of digital sales

Mobile music services now account for about half of Universal Music Group's digital business according to Rio Caraeff, executive vice president of the major label's eLabs unit. "About 40 to 45 percent of our overall digital business is coming from mobile channels like Verizon and AT&T," Caraeff said in an interview with CNET, adding "On much of our new frontline pop or R&B or urban releases--everything from Fergie to Rhianna to Pussycat Dolls--we're seeing mobile comprising 20 to 45 percent of the revenue for those artists, which is a tremendous amount."

During the first nine months of 2008, Universal reported revenue growth of 3.5 percent to nearly $4 billion, with digital sales growing 33 percent. According to Caraeff, the label's goal is to offer consumers access to music via multiple distribution channels. "The customer doesn't want a mobile-only experience--they want an all-digital multi-platform experience," Caraeff said. "They want to consume music on their mobile handset but have parity on their PC and other online platforms. Partners like Verizon and AT&T wanted to have multi-platform online experiences as well. It didn't make sense to have a silo approach. Now at Universal, we don't have a mobile business. We don't have an online business. We just have one multi-platform digital business. We equalized our pricing so it costs the same amount of money to buy a song on a cell phone as it does on a PC. These are things that make sense on a consumer perspective."

Caraeff also credits increasing mobile revenues to new digital sales platforms like Internet retail giant Amazon.com's Amazon MP3 storefront, which arrived pre-loaded [1] on T-Mobile USA's G1, the first handset based on Google's Android mobile operating system. "Now Amazon will tell you that Android is their single largest source of downloads from any third-party partnership that they've ever done," Caraeff said. "It's a tremendous amount of consumption that we're seeing once you integrate it seamlessly into a user experience that's elegant and easy to use. It's not 10 clicks. It's very elegant and easy. We're starting to see consumption increase significantly. It's early days on Android. There's not that many out there on T-Mobile, but even with the small amount out there, they're downloading and purchasing a ton of music over the air on T-Mobile... once the platform evolves, you'll see music consumption really start to skyrocket."

For more on UMG's perspective on mobile music:
- read this CNET article [2]