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To keep up momentum, analysts recommend carriers develop aggressive pricing, licensing deals, distribution channels and marketing strategies.

Antone Gonsalves

January 23, 2007

2 Min Read

Global spending on mobile music from ring tones to full-track downloads is expected to reach $32.2 billion by 2010, with consumers in the Asia-Pacific region and Japan leading the market, a researcher said Tuesday.

Spending on music for handsets is forecast to increase by nearly two and a half times this year's predicted $13.7 billion, Gartner said in its global outlook for the mobile music market. The growth will occur despite competition from digital music players, and a host of challenges faced by telecommunications carriers in delivering these services. Ring tones today are the second most popular mobile data service, with text messaging No. 1 in terms of use and revenue, Gartner said. Driving the use of mobile music is personalization and entertainment. Ring tones and ring-back tones, for example, are part of the trend to turn mobile phones into a form of self-expression. Ring-back tones are a piece of music or audio clip that mobile phone users select for callers to hear instead of the traditional ringing signal when they dial a mobile number. Carriers own the ring-tone business, but they are not in such a strong position on the entertainment side of mobile music, such as streaming and full-track downloads, Gartner analyst Stephanie Pittet said. Wireless companies stand to lose market share in the latter to makers of digital music players, record companies and others. Examples of digital player manufacturers entering the market include Apple and its recently released iPhone. In addition, Apple iTunes and Microsoft Zune are examples of online digital music shops that would compete with portals from mobile carriers. To prevent losing market share, carriers will need to develop content partnerships, pricing that's acceptable to consumers, licensing deals, distribution channels and marketing strategies, Pittet said. In addition, carriers will have to address technical challenges, such as copyright protection, storage capacity on devices and network coverage. In terms of the global market, consumers in the Asia-Pacific region, including Japan, are expected to remain the biggest spenders on mobile music through 2010, with Western Europeans second and North Americans third. The Asia-Pacific consumers are expected to take the lead in full-track downloads to cellular phones, while North Americans are predicted to continue to favor "sideloading," which is the transfer of content from a PC to the phone.

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