Record exec: Mobile industry could learn from Apple

Speaking at CTIA Wireless, EMI Group's CEO urged mobile phone industry to follow Apple's lead in developing and selling products.
Written by Marguerite Reardon, Contributor
ORLANDO, Fla.--The wireless industry needs to borrow a page from Apple's playbook if it expects to exploit the huge potential in mobile music, EMI Group's chief executive said on Wednesday.

In 2007 the mobile music market is projected to generate $13 billion, and it is expected to grow to $32 billion in revenue by 2010. But in a keynote address at the CTIA Wireless trade show, EMI's Eric Nicoli warned the industry that it would not reach its potential if mobile operators, handset makers and content providers don't work together and put the customer first. He said they need to make sure that every product they develop for consumers is one that people want, is easy to use, and provides value at an affordable price.

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"We will not reach our goals if we carry on as we have been doing," he said. "Not to diminish what we have achieved so far, but there are important challenges to address if we want to take this business to the next level. And that means we must put the customer at the forefront."

Nicoli pointed specifically to the iPhone, Apple's music-playing phone set to debut in the U.S. on AT&T's wireless network in June. Announced in January, the iPhone has created a stir and buzz not achieved by any other handset maker in the industry. And the company isn't even showing off the device at the CTIA trade show. During a keynote on Tuesday, Randall Stephenson, AT&T's COO, said the company had heard from more than 1 million customers who wanted more information about the phone.

"Apple makes stuff that people love to own," Nicoli said. "They love the simplicity and user-friendliness of the iPod and iTunes. Apple doesn't employ any sorcery or dark magic to achieve this. They listen to what consumers want. And that shouldn't be Apple's unique privilege."

Nicoli also touched on the issue of digital rights management. He said that his company's experiment with selling a select catalog of unprotected music by a few of its artists has already had some interesting and promising results. He did not say whether EMI might expand or abandon this practice.

Digital rights management, or DRM, has been an explosive topic for years as copyright owners, device makers and music distributors grapple with how to protect content that is distributed digitally online or over the airwaves.

Earlier this year, Steve Jobs, Apple's CEO, ignited a firestorm when he urged the record industry to abandon DRM technologies. Music executives lashed out in response. At the 3GSM World Congress in Barcelona in February, Warner Music Group's CEO Edgar Bronfman Jr. called for more DRM interoperability rather than a ban on the technology.

At the end of the day, EMI seems willing to try different models to see which one fits the best. But in Nicoli's view, one thing is already clear: the industry needs to make changes now.

"The status quo is not an option if we hope to exceed our goals," he said. "We have in our grasp an incredible opportunity to create a colossal business through mobile. But we only have a chance to achieve this if we work together in a more thoughtful way."

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