In a short span of time, the recording industry has witnessed a proliferation of new assets.  "The next big thing is not one thing, the next big thing is a dozen different things," said Thomas Hesse, president of Global Digital Entertainment at Sony BMG during a presentation at NARM this week.

And both digital and mobile assets - which include ringtones, downloads, and ringback tones - will soon account for 50 percent of recorded revenues at Sony BMG, according to Hesse.  The ratio, expected by next year, builds upon a current digital breakdown of approximately 40 percent.

Other major label groups are experiencing similar ratio transformations, partly because of the nosediving CD.  And that erosion is not being supplanted by digital formats, despite relatively high price tags associated with assets like ringtones, and arguably, paid downloads.

On top of that, once-booming ringtones have decelerated considerably, and shifted into a stagnant state.  That has the industry searching for another high-growth mobile asset, though Universal Music Group executive vice president and general manager of Digital Distribution Amanda Marks countered the prevailing mood towards the jingle. 

The executive pointed to continued ringtone successes by Universal artists, and potential expansion ahead.  "While it is clear that the torrent growth in the sector is over, I expect that we will still see some growth in this area in 2008 due to bundles, improved storefronts, and improvements in the shopping experience," Marks predicted.

Those changes include on-deck previews of content, a nice feature for would-be buyers.  Meanwhile, the bundling of mobile assets remains a mostly-untapped opportunity, and a potentially attractive proposition for consumers. 

It may also address the massive pricing disparities that currently characterize different recording formats.  Some executives still express disbelief that an online download carries a price tag of 99-cents, while a mobile ringtone often clears $2.50. 

Bridging the gap, a bundled play could deliver a variety of assets within one, convenient purchase, lowering per-unit costs but raising the overall transaction amount.  Meanwhile, Hesse pointed to interesting possibilities involving bundled artwork and other value-adds. 

On a more nuts-and-bolts level, carriers and mobile content providers are still moving towards smooth bundling, and technical hurdles remain.  And currently, mobile media ecommerce is mostly geared towards discrete, non-bundled purchases. 

But that may be inconsistent with what customers are ultimately looking for.  "The consumer wants to shop by artist, not by product," Marks explained.

That all sounds nice theoretically, though it remains unclear whether fans will be interested in consolidated purchases, at least in meaningful quantities.  After all, pricing disparities between a-la-carte downloads and ringtones are rooted in perceived valuation differences by consumers.  "A ringtone is worth money because it expresses who you are," said investor Tim Chang during a conversation across town at the SanFran MusicTech Summit.  "An MP3 is worth nothing because it's a static piece of content."

But Hesse and Marks are also diving into an entirely different mobile bundling experiment, one being tested by Nokia later this year.  The concept, called Comes With Music, bundles massive catalogs into device purchases, an entirely new purchasing behavior.

Consumers will be able to access those downloads for one year, though Hesse outlined some limitations.  "You get access to as much music as you want for one year, though they are tethered to one phone and one PC," Hesse told Digital Music News.   That means DRM-protected content, and a requirement to renew licenses after the one year period lapses.  Nokia has not specified which territories will receive the service first. 

Meanwhile, the highly-successful bundle of old - the pre-recorded album - is disintegrating into a marketplace of one-off purchases, a shift that is driving the next-generation packaging plans.  Now, the question is whether the industry can successfully forge a packaged play across digital and mobile platforms, and effectively reclaim the lost bundle.

^{_{Report by publisher Paul Resnikoff in San Francisco.}}