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Industry Eyes Mobile Music Content Sales

Rising consumer interest in music-enabled mobile phones has companies seeing dollar signs in over-the-air music sales

With the popularity of MP3 players, music download services and more mobile phones capable of over-the-air music downloads or transfers coming to market every month, mobile content, led by mobile music, could become an ever-larger revenue stream for smart carriers and content companies.

That is not to say this is a huge revenue generator for the industry – at least not yet. According to NPD’s Mobile Consumer Track data, only two percent of the mobile phone subscriber base said they listened to digital music on their handsets. In addition, only one percent of subscribers report downloading music to their mobile phones.

More and more music-enabled devices are coming to market every day (see related Wireless Bulletin) from SonyEricsson’s Walkman line and Nokia’s N Series phones, to Motorola’s iTunes-capable devices and LG’s Fusic and Chocolate phones. In addition, carriers are aggressively highlighting their music services and music capable devices to consumers at-large. While NPD data shows that only a very small number of subscribers are using their mobile phones as MP3 players, it is still interesting to see how these early adopters are actually loading music content onto their devices.

Among consumers who report using mobile music on their phones, 15 percent said they used Bluetooth or Infrared to move the music over-the-air (OTA) between their devices. By comparison, close to 30 percent reported using a cable connection and another 30 percent downloaded the music from their wireless carriers’ sites. The most popular method of loading music onto mobile phones was via removable memory, with 44 percent of active mobile music listeners using this method.

Obviously, the install base for music capable devices is still relatively small, but growing. In addition, while carriers would prefer consumers use OTA downloads, as it generates additional revenue, handset manufacturers are giving consumers more options by bringing to market additional mobile phones with removable memory, including those in the mid-tier segment.

NPD’s Mobile Phone Track data shows that the share of devices sold with some type of removable memory has grown from less than two percent in the second quarter of 2005 to close to six percent during the first quarter of 2006. While this share represents only a small fraction of the market, it does equate to more than five million units sold in the previous 12 months, which is sizable growth over just a few quarters.

So given an increasing number of music-enabled mobile devices entering the market and operators continuing to simplify the process of buying music, it means that if the market matures and continues on its current trajectory, we can expect mobile music content sales to grow into the prosperous adult the industry is banking on.

-- Charul Vyas, Senior Wireless Specialist