Yahoo reshuffles, and Google follows it in Asia

Today's news, slipped in after the markets closed, was that Yahoo has finally reshuffled its top management, with Terry Semel out as CEO and Jerry Yang in. In an attempt to appease frustrated shareholders as Yahoo continues to lag behind Google in popularity (both for searches and for ad sales), Susan Decker has also been promoted up to the newly-created role of president to support Yang.

Jerry Yang, who was one of the founders of Yahoo, has in recent years focussed a lot of his attention on the company's growth in Asia. The search giant has struck some very fruitful deals in the East, for example partnering with Softbank in Japan to offer a hugely popular Internet and broadband service. And when things started to go awry in China, Yahoo decided to bank on a similar type of arrangement, striking up a joint venture with local partner Alibaba, of which it now owns 40%. It's also attracted controversy for complying with Chinese authorities to provide information about its users (with them subsequently landing in jail for making anti-government statements).

Human rights notwithstanding, if Yahoo was hoping that it had stolen a march on Google in the East, Jerry Yang might have to rethink the strategy. Last week, Google announced it would team up with the Chinese portal Sina to offer services on the mainland. Google already has a respectable portion of the market for search in China (some 19% according to Analysys International), but it has found it difficult to gain the same kind of dominance in China as it has in other (western) parts of the world. Now Google is following in the footsteps of its rival Yahoo in teaming up to target the market. Google has also taken a similar route in South Korea, and one wonders if Japan or other Asian countries might also be JV targets.

Chatting about this deal with our Hong Kong-based correspondent Craig, he relayed this anecdote: "I tried using Google inside China's great firewall and it was amazing how frustrating and useless it is as everything's blocked. The way China controls stuff, you really need a partner."

He went on to say that the Sina deal makes sense as China will continue to focus on holding up national Internet champions. China doesn't have laws enforcing joint ventures for foreign Internet companies that want to do business in the country (as it does for infrastructure-based businesses like telecoms). But the moves by Yahoo aligning with Alibaba and Yahoo teaming with Sina demonstrates that this seems to be the de facto route anyway.

Mobile music: to boldly go where no one has gone before

This was published last Friday on Total Content + Media's web site....

This week saw the launch of a new mobile music service called MusicStation.

For those of you who think that mobile music—downloading tracks over a cellular network and listening to them on your phone—has been a non-starter so far, you are right. In the UK, for example, only 1.7 million people used their phones to listen to music downloaded from operators in the course of a month, says M-Metrics; another 5.4 million used their phones to listen to sideloaded music (taken off PCs). But compare both of those figures to the number of MP3 players in use in the UK: nearly 19 million; or the number of mobile phones in the UK: over 60 million.

Even Rob Lewis, the CEO of Omnifone (the company behind MusicStation) admitted to me that “Mobile music today is not a grown up experience.”

But put your scepticism aside! MusicStation is hoping its new approach will prove you wrong. It claims to have the most comprehensive catalogue—having signed global agreements with the four major labels of Sony BMG, Universal Music, Warner Music and EMI, and many of the minor ones—the most deals with mobile operators to run the service, and the most agreements with important vendors to preload the service onto handsets (although it admits that the number-two handset maker Motorola, is not pre-loading it on its music models just yet).

And instead of selling a la carte tracks, it is based around a subscription model, where a user pays one price per week for an unlimited amount of music. (The catch is that you don’t get to own any of the tracks you listen to.)

It’s no surprise that the labels have signed up—after all, they couldn’t possibly be doing any worse in mobile music than they are now. What’s interesting is that the operators and vendors, who have usually relied on exclusivity in their data offerings, have all agreed to try out a collaborative approach. (Compare this for example to AT&T, which has a five-year exclusive agreement to distribute the iPhone in the US, hoping this will migrate mobile users to its network.)

Still, MusicStation is not going all guns blazing from the start: the service launched first this week in the tech-happy but small market of Sweden, not with the incumbent but with Telenor’s network, charging users €2.99 per week for the service. Lewis tells me that the “lion’s share” of the revenues—well over 50%—will go to the music labels. Operators will get a cut in the billing and also a provision for letting the data pass over the network for no charge.

Lewis says Omnifone does not want to target the US market at this point because of the high penetration of MP3 players and the patchy availability of high-speed mobile data networks, which are necessary for the service to work.

“It’s really a landgrab right now in the digital music market, and we can’t catch up in the US,” Lewis told me when I met him earlier this week. Omnifone will instead aim for Europe and Asia, where they want the service to be on 100 million devices in the next 12 months. But the company would not give a target for subscriptions, or indeed how many would be needed to break even as a business.

There’s a lot to be pointed out in how MusicStation will differ from what is already available on the market today.

For one, because the tracks you hear will not be download-to-own, they will be quicker to get from the network than ordinary tracks.

And given that people have not been prepared cough up much money at the price points set for a la carte mobile music today (or any digital music, for that matter), it’s about time that the subscription model be tried out, even it’s unfamiliar to the music industry (and crucially to music consumers). It’s worth noting MusicStation isn’t the only one trying to push this: both Yahoo and Rhapsody are also trying out subscription models in their PC-based music services.

Plus it’s launching at what Paul Goode, an analyst at M-Metrics, told me was “the perfect time,” with “a raft” of music phones about to hit the market later this year. He said that of the 730 phones in the UK market today, only about 10 could really be classified as “true music phones.” An appallingly low number like that goes some way towards explaining why mobile music hasn’t worked so far.