T-Mobile and EMI trial ad-funded music video service

T-Mobile is working with record label EMI and Rhythm NewMedia on an advertising-supported mobile music video service being tested in the UK.

The companies announced the partnership on Monday, a day before the mobile industry gathers in the US for the Cellular Telecommunications & Internet Association's semi-annual trade show.

The service, which is only in the trial phase, allows T-Mobile's mobile-phone users to watch entertainment, news and music clips from their mobile phones. California-based Rhythm NewMedia will operate the service, providing video content to users after they sit through a short advertisement. Microsoft and Coca-Cola are among the first companies to advertise on the new T-Mobile service.

EMI and T-Mobile are just two of many content providers and mobile operators considering the use of advertisements to generate revenue for mobile content. Earlier this year, Vodafone tested a similar service with Rhythm NewMedia. EMI and Universal Music have also agreed to make some of their music catalogues available to SpiralFrog, another company that distributes advertising-sponsored content. SpiralFrog allows users to download music for free onto their PCs, and it also allows them to transfer the music to portable devices as well.

"At EMI, we are experimenting with a number of new and exciting business models to fulfill demand while at the same time ensuring that artists are fully compensated for their work," Tony Wadsworth, chairman and chief executive of EMI Music UK and Ireland said in a statement. "The advertising-supported model is currently generating a lot of interest, and we think we'll learn more about what fans want from mobile music in this trial."

The advertisements seen before the music video clips will be paired with the artist selected by the user, EMI said. The record label's most prominent artists include Coldplay and Robbie Williams.

Recent studies indicate that mobile-phone users are willing to watch video on their phones, but they don't want to pay for it. Today, only about 11 per cent of all handsets are able to show video, according to Jupiter Research. Of that pool of video-enabled handsets, about 25 per cent of consumers are interested in receiving video on their mobile phones. But only 1 per cent are willing to pay for the service, the study said.

Mobile advertising could help defray the cost of providing all this content. The advertising model has worked well to support broadcast television and radio, and even some Internet content. Many people in the mobile community believe it will also be big in supporting mobile content as well. Informa Telecoms & Media, a research firm based in the UK, predicts that mobile advertising will boom to more than $11.3bn by 2011, up from $871m in 2006.