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August 03, 2005

Mobile Downloads To Overtake The Net

The Guardian: The International Federation of the Phonographic Industry (IFPI) has predicted that mobile phones could overtake the internet as the most popular medium for downloading music as 3G handsets become more affordable. "The $500m (£280m) the record industry derived from worldwide downloads last year was split evenly between mobiles and the internet. As 90% of the population in markets like the UK have a mobile, compared with 10% who own a digital music player, the IFPI expects phone downloads to soon outstrip the internet." Digital download sales, which now account for 5% of record company turnover, are expected to double every six months for the next few years.
I'm not entirely sure these figures hold up, but without getting the report I can't really investigate my concerns deeper...most mobile music is ringtones, and I assume these were included in the figure cited above (they pay royalties, after all). However, as handsets become more sophisticated ringtones are becoming actual clips of songs, or 'voicetones' of celebrities. As such, the ringtone market will gradually be replaced by the full-track market. Recently launched services that sell full-track songs over the mobile network charge about $1.50, less than the cost of a ringtone -- so the revenue for the market will fall. Of course, $1.50 is still a lot higher than the cost of songs on the internet, and unless there is a similar reduction in price or additional value added most people will download music on the internet and transfer it to mobile phones.
In the long-term I think mobile music has a strong future, but in the near to medium term I believe it will be used mainly as a promotional vehicle.
Incidentally, while cruising the IFPI site looking for more details I came across this speech given in Brussels in March...including this tidbit: "For 99 Cents you get something you will keep longer than your clothes, your concert ticket, your Real Madrid shirt, even your car, your digital watch, your iPod or your mobile phone." If this is the case why has the music industry in Australia argued against legalizing backups of legally purchased music? Why -- until very recently -- have DRM technologies not allowed you to make a copy of a CD? If you lose your mobile phone can you hook into some database which records all the music you've purchased and get your songs again for free? If a CD breaks can you get it replaced for the cost of a blank CD? Considering the efforts the record labels have put into linking musical tracks to hardware this statement is the most disingenuous to come out of a music organization that I can remember...
Related stories:
--"Customers Aren't Stupid" - Jobs
--3 Sells Mobile Music Tracks From EMI
--Ringtones Industry Peaking?

Posted by James in Mobile Music | Permalink


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