Mobile Music Keeps Humming As Music Industry Shrinks

juniperIf you’ve followed the music biz’s uncomfortable adaptation to the online age, you’ve probably heard this one before: One segment within the industry is taking “a larger slice of a shrinking pie.” A new study from U.K.-based Juniper Research forecasts modest growth worldwide in mobile music over a five-year period, as the larger music industry continues to founder.

The report estimates that end user-generated revenue from mobile music will rise to $14.6 billion in 2013 from $11 billion in 2008, with full-song downloads and streaming services driving much of the growth. Faster networks and larger handset storage capacity are stimulating consumer interest in over-the-air downloads, which presumably cannibalize some PC sales. At the same time, however, the study shows that consumers appear to be losing interest in paid ringtones, which the study calls “less attractive when priced at a premium to full-track downloads.” (Polyphonic ringtones, which are most commonly digital simulations of familiar songs, are singled out as “last season’s wardrobe” compared with so-called truetones, which are excerpts from popular tracks, although the study says the latter’s novelty is wearing off as well.)

Despite growth in some segments, especially in Asia and Western Europe, the study acknowledges that consumers’ discretionary spending is still weak, and suggests that confusing user interfaces, incomplete network coverage, and cost of data services remain significant hurdles to consumer adoption of mobile music. In addition, the study said that advertising-driven business models will continue to suffer, with ad spending in the sector falling by as much as 50 percent from pre-downturn estimates, while paid subscription services continue to emerge as viable alternatives.

As network and bandwidth problems are gradually being solved, entirely new questions have begun to arise that could further upset the roiling music business. (Here’s one: Who will buy a song on a cell phone when it’s available for free streaming, anytime and anyplace?) But for now, mobile services are a bright spot in a suffering industry, taking advantage of the shift toward cloud-based services and offering new opportunities as phones replace MP3 players as the handheld device of choice for music consumers.