Two songs a week, one pound each: when O2 signed half of Groove Armada

Ringback · 2026-08-14

In July 2005, a British phone network signed a musician the way a label signs an act

In the first week of July 2005, Andy Cato — one half of the dance duo Groove Armada, then spending his summer DJing in Ibiza — was flown into London to promote a contract no British musician had signed before. The terms, as the Guardian reported that week: Cato, acting as a solo artist, would supply O2 with two exclusive tracks every week, sold only to the network's customers at £1 each, with the revenue split between artist and operator. The Guardian framed the arrangement as an attempt to gain control over digital downloading; Cato told the paper that piracy was rampant, that the digital systems were slightly out of control, and that this was perhaps “one way of stabilising the situation.”

The BBC News website added more detail the same day, July 6: the first track would go on sale that Friday, July 8, and the weekly pair would continue from there. Campaign, the advertising trade paper, recorded the opening schedule — “Got to Get Together” on the Friday, “After the Rain Falls” on the Sunday — and reported the revenue split as equal. Cato was blunt with the BBC about why an artist would deal with a phone company at all: “With labels, it is impossible to calculate how much you get per song,” he said. “When you do, you weep.”

The weblog that then occupied this domain covered the deal the morning it broke, skeptically, filing it under three categories at once.

O2 Signs Musician To Exclusive Contract · mobilemusicblog.com · 2005-07-06 11:25 AM · filed under DRM, Mobile Operators, Services · via Internet Archive

Here is what the deal was, stated plainly, because it is also the answer to why it mattered: this was the furthest any British carrier went in the industry's 2005 project of becoming a record company — not licensing a catalogue, but contracting a named artist for original, exclusive weekly releases, label-style. And it is the cleanest possible measure of how that project ended, because it left almost no trace: no subscriber-switching effect was ever reported, no sales figure ever surfaced, and within twenty-seven months O2 had abandoned the operator-as-label idea so completely that it signed on as the local shopkeeper for Apple's phone. Before Spotify, this is what buying digital music in Britain looked like: £1 to £1.50 a track from your phone network, or 79p from Apple, and the networks lost that argument at every price they tried.

The clause that aged best: Cato's tracks carried no DRM

One line in the BBC's report outlived everything else in it. Unlike every other track on the O2 Active · music service 2005 store, Cato's tunes would carry no digital rights management. Buyers could move them to a PC or burn them to CD without restriction — and, as the BBC noted, nothing prevented them from turning up on file-sharing networks either. Cato admitted to the BBC that he had been “incredibly annoyed” to see Groove Armada songs shared illegally. But, describing himself as a Luddite who had not heard of DRM until he was flown in to promote the service, he told the BBC that trying to stop copying with technology or lawsuits was “like trying to hold back the tide.”

In July 2005 that read as an artist's shrug against the entire direction of the industry, which was then wrapping every mobile track in carrier-specific locks. Within four years it was official policy: Apple announced on January 6, 2009 that the whole iTunes catalogue — with all four major labels participating — would be DRM-free by the end of that March. The DRM war is its own story, told elsewhere in this series; what belongs here is the plain oddity that the most consumer-friendly download terms sold in Britain in 2005 came from a phone company's novelty signing.

The generosity had a narrow doorway, though. The BBC noted that O2's music service worked, at the time, on exactly two handsets: the Siemens SX1 and the O2 XM. The most open music files on the UK market were purchasable by almost nobody.

Every network was building its own record shop

The Cato signing was not an outlier; it was one week's news in a crowded season. The comparator every carrier priced against was the iTunes Music Store · opened 2003, which had arrived in the UK on June 15, 2004 at 79p a track with a 700,000-song catalogue, and by Apple's own accounting sold more than 450,000 downloads in Britain in its first week. Every operator store that followed charged more than that for less catalogue, delivered to worse hardware.

Vodafone live! · full tracks 2004 went first at scale. Vodafone's consumer 3G launch on November 10, 2004 spanned thirteen countries and carried music downloads among its launch services; in the UK the price was £1.50 a track — a figure The Register's review of the Sony Ericsson V800, one of the launch handsets, called “a bit pricey” while noting Vodafone was banking on the impulse purchase.

Orange Music Player · 300,000 tracks 2005 followed a year later. Orange's October 20, 2005 announcement — the service went live on November 1 — offered 300,000 tracks at £1.50 each or three for £3, on eleven handsets, with a promise of half a million tracks by Christmas. Orange's head of music, Mark Ashford, asked in the launch release: “why buy a separate music device this Christmas, when everything you need is on an Orange phone?” The iPod nano, released that September, turned out to be most of the market's answer.

3 MusicStore · nine markets 2005 preferred to argue with statistics. In June 2005 the operator 3 announced that more than 30 million “full version music clips” had been downloaded or streamed across its nine markets — a figure whose fine print counted music videos, truetones and ringback tones alongside actual songs, an accounting choice period observers picked apart immediately.

3 Says 30 Million Music Downloads — But… · mobilemusicblog.com · 2005-06-16 08:58 AM · filed under Mobile Operators, Stats · via Internet Archive

T-Mobile Jukebox · Williams deal 2005 made the biggest single bet on the artist-exclusive model three weeks after O2's. On July 27, 2005, T-Mobile International announced an 18-month partnership with Robbie Williams — streamed live concerts, full-track downloads, ringtones, realtones, wallpapers and unreleased material, all sold through T-Mobile's own portal rather than anyone else's; the download store itself traded under the Mobile Jukebox name. The press release had Williams declare: “The future is music by mobile — T-Mobile is making it happen today!”

Beneath the store brands sat mostly one company's plumbing. OD2 — On Demand Distribution, co-founded in Bristol in November 1999 by Peter Gabriel and a group of industry executives — supplied the white-label download infrastructure behind more than a hundred European storefronts, from MSN Music UK to MyCokeMusic. Seattle's Loudeye bought OD2 in June 2004 for roughly $40 million; by October 19, 2005 the Nokia / OD2 chain · sold 2006 was powering O2 Germany's music store in partnership with Nokia; and in August 2006 Nokia bought Loudeye outright for $60 million to build what became the Nokia Music Store. The same BBC report that covered Cato listed the rest of the field: Sony Ericsson's first Walkman phone due in August, Sony Ericsson partnering Napster, Nokia designing entertainment handsets, and Motorola still working on its ROKR / iTunes · launched 2005 phone with Apple — the delayed device whose carrier politics are the previous article's subject.

Why an exclusive could not move a SIM card

The 2005 post at this address made the argument against the deal on the day it was announced, and twenty years have not improved on it: nobody switches phone networks for one artist's weekly off-cuts. Mobile-only exclusives could work, the post argued, only if the content was genuinely compelling — current hits, not experiments — and an operator that had signed current hits would not need the exclusive. The logic is a trap with no exit: any exclusive strong enough to make a customer endure a SIM swap, a new number and a new contract is exactly the catalogue an artist would never confine to one network's two compatible handsets. Measured as catalogue, O2's label ambitions ran to one half of one duo, compounding at two tracks a week.

The money did not obviously favour the artist either. Half of a £1 carrier download was a headline share, but the same 2005 post noted that Bleep.com — the independent, DRM-free download shop run by Warp — was already paying artists half of its 99p price with none of the network lock-in. The carrier's premium bought reach in theory; in practice the reach was two handset models and whatever fraction of their owners browsed a WAP portal for dance instrumentals.

And the carriers' pricing instinct ran the wrong way for a market that already had a benchmark. Apple sold any track in a 700,000-song catalogue for 79p. The networks sold their much thinner catalogues at £1 to £1.50, because carrier billing had been built on ringtone economics — impulse prices for personalization goods — and unlearning that pricing would have meant admitting the music store was not a premium service but a commodity one. The full pricing autopsy, from monophonic ringtones to the mastertone peak, belongs to a later article in this series; the single number that matters here is that every British network priced its songs above the 79p everyone could see.

Two years later, O2 stopped trying to be a label and took the iPhone instead

O2 kept trying for a while. On September 19, 2006 it announced a converged O2 Music Service — PC and over-the-air downloads, CD burning, portability across devices — and said it was in advanced negotiations with Loudeye to build it. The press release's stated design principle, from O2's head of content marketing Grahame Riddell, was that the service was “being defined by how consumers actually want to interact with digital music.”

What consumers actually wanted arrived the following autumn wearing someone else's badge. On September 18, 2007, Apple announced that O2 would be the iPhone's exclusive UK carrier when the device went on sale on November 9 — an 8 GB model at £269, tariffs from £35. The strategic inversion was total. In July 2005, O2's music play was to own the artist, the store, the price and the customer. In November 2007 it sold a phone whose music store belonged entirely to Apple, whose songs were loaded from iTunes, and whose margin for the operator was airtime. The carrier that had tried hardest to be a label became, for the era's defining music phone, a distribution channel — which is what carriers had been all along.

There was one more spasm of the old model: in August 2008, O2 and Sony BMG opened “My Play,” billed as the first operator-supported major-label mobile music store, selling full tracks at 99p — and ringtones at £3.50, three and a half times the price of the songs they were clipped from. By then the argument was over everywhere but the price list. When streaming subscriptions arrived to settle what a song was worth per month rather than per track, there was no carrier record shop left standing to lose the negotiation.

The tide took the shops, not the customers

Cato's line to the BBC — that fighting copying was like trying to hold back the tide — was the deal's one durable export. He was right about the tide; the industry adopted his shrug as policy within four years. What he and O2 both misjudged was what the water would carry away first. The rampant piracy of 2005 did not drown the record business's paying customers; they were still there in 2007, queueing for a £269 phone. What the tide took was the shops — every carrier storefront in this article, and the OD2-to-Nokia plumbing beneath them, gone without a closing-down notice between them. Cato, for his part, eventually made the Luddite self-description official: he sold his rights in the Groove Armada catalogue, Mixmag reported, to fund a move into farming. Two songs a week, one pound each, was never a business. As a fossil, though, it is perfect: the exact high-water mark of the year the phone networks believed they were the future of the record industry, preserved at the address that doubted it the same morning.