Blog Post

Challenges Facing Mobile Music

If the mobile music industry is going to take off, it appears to be down to the labels and carriers — at least, that’s the impression given in this RCR News, which does a good job of outlining the mobile music industry and the challenges faced by aggregators. “Music labels generally get about 50% of revenues from the music clips, and carriers demand roughly 40%. The remaining 10% goes to the distributor–as does the responsibility of making sure everybody else in the value chain gets a taste.” Groove Mobile CMO Adam Sexton is quoted a fair bit, giving opinions on the changes in mobile music price of 3 (up) and Sprint (NYSE: S) (down). It also quotes Gartner’s prediction that mobile music will increase “from $13.7 billion this year to more than $32 billion by 2010”. I’m not sure this holds true… IFPI reports that the global music market for 2006 was $31.8 billion (PDF), but it should be noted that this figure doesn’t include ringtones and other music content that doesn’t send a slice back to the carriers, whereas the Gartner figure includes all forms of mobile music. However, by many accounts the ringtone market has passed its peak (at least in the countries with developed mobile services) and people are now using MP3s as ringtones — but aren’t necessarily buying them from mobile stores. I would say that the mobile music market is not going to grow naturally, it’s going to take a strong and innovative effort by the industry to offer something that people are willing to buy.