Tuesday, March 4, 2008

Full-Track Downloads to Eclipse Ringtones in Mobile Music Market

Worldwide revenue from mobile music distribution is expected to reach $17.5 billion annually by 2012, driven by the ongoing growth of music rental services and full-track downloads, according to a recent report by Juniper Research.

“I think it’s fair to say that 2007 marked the tipping point as far as mobile music adoption was concerned,” commented Juniper analyst and report author, Dr. Windsor Holden. “Far more subscribers began downloading and subscribing to music content in developed markets, and it must be said that that the publicity surrounding the iPhone launch undoubtedly contributed to consumer awareness of mobile music services per se.”

The report cautions, however, that the current price of ringtones may be unsustainable, and that demand for ringtone downloads may have peaked in many developed markets. In the coming years, increased competition, combined with the prevalence of ad-funded ringtone services could gradually eat away at global ringtone revenue, which will account for just 38% of mobile music sales in 2012, down from 62% last year.

“With some operators now offering full-track downloads at a comparable price to iTunes, there is little justification for a ringtone retail price point that is in many cases two or even three times this level,” Holden explained. “Furthermore, those aggregators whose portfolios are largely dependent upon the polyphonic ringtone will be unable to survive in the medium term unless they both rethink their pricing strategies and substantially diversify their product portfolios.”

In the coming years, Juniper Research expects that China and other Asia-Pacific countries will remain the largest regional marketplace for mobile music services, accounting for around 43% of combined global revenue through 2012.

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