‘Personalisation’ will drive mobile music sales – Gartner

25 Jan 2007

Revenue generated by mobile phone music downloads will more than double by 2010, Gartner has predicted.

The telecoms analyst firm said money spent by consumers downloading to their mobiles will reach US$32bn, up from US$13.7bn in 2007.

Mobile music, which includes services from basic ringtones, realtones and ringback tones to more sophisticated full track downloads and streaming, has existed since 1998 when the first ringtones were commercialised.

Gartner said this would be driven by a strong personalisation trend that will encompass ringtones and ringback tones.

It is the second-most popular mobile data service, although considerably behind short message service (SMS) in terms of use and revenue.

The use of ringtones and ringback tones is part of the trend to personalise mobile phones as a form of self expression, Gartner said.

However, the mobile phone can now be used to play music, in some situations replacing portable music players like the popular iPod for entertainment.

Stephanie Pittet, principal research analyst at Gartner, said that while mobile music was growing from a small base, it represented a good revenue opportunity for providers that “get it right”.

“Mobile carriers have a strategic advantage when it comes to delivering ringtones, as they already know the end user’s network settings, handset and personal preferences,” said Pittet.

“However, when it comes to the ‘entertainment’ side of mobile music like streaming and full track downloads, they risk losing share to other players which might include device vendors, record companies and other solution providers.”

More recently, Apple announced its entry into the device market with the iPhone. Mobile access to iTunes, along with other digital music shops such as Microsoft’s upcoming Zune offering (that will allow WLAN access to its music shop) will compete directly with mobile carriers’ portals.

However, Gartner identified a range of factors that are helping mobile carriers to secure a new revenue stream.

“The mobile phone has become the device that people carry everywhere, in all circumstances,” said Pittet. “Over-the-air downloads mean that people no longer have to be at a desk to plug in the device.

“Billing via a mobile phone is secure and easy and for operators it is easy to target customers with personalised content because one mobile phone SIM card is used by one person most of the time.”

Pittet continued: “Carriers must figure out how to develop the right content partnerships, pricing strategies, content partnerships, licensing deals, distribution channels and marketing.

“There are also a host of technical challenges to be addressed, such as digital rights management (DRM), storage capacity on the mobile device and network coverage,” she said.

In 2005, people in Asia-Pacific and Japan made up more than 41pc of the worldwide spending on mobile music and while that proportion will decrease slightly by 2010, the region is still forecast to be the biggest spender.

Western Europe is the second-largest region for mobile music, with total spending forecast to top US$9.1bn by 2010, while North America is forecast to reach US$7.1bn.

By John Kennedy