I'm happy to welcome John White from Portio Research Ltd to review the market of mobile music here at Xellular Identity.
John White is Business Development Director for Portio Research and has over 17 years experience in the technical publishing industry. Working in the IT sector previously and in the telecoms industry for the last 9 or 10 years, John has extensive experience in the mobile sector. John has been Editor and contributing author for the newly-released Digital Music Futures 2007-2011 report.
So first, let's meet John:
XM: Hi John. Thank you for visiting Xellular Identity :) How are you?
JW: Hi Xen, thanks a lot, I’m doing great thanks, I hope you are too?
XM: I'm great thanks, great things are happening lately! What brought you to the world of mobile?
JW: I spent a lot of time working in IT and publishing, and I came into the world of mobile through that route about 10 years ago, as a publisher.
XM: What takes up your time other than mobile?
JW: Mostly my three kids, but also my wife, my dog, running, kung-fu, a lot of reading, a bit of rock climbing, fixing up the house, trying to keep my family as ‘green’ and environmentally friendly as possible, enjoying watching lots of movies and many more interests besides…when my children allow me time for them!
XM: Well, heading going to the music market, what are the estimates for mobile music market for the next years?
JW: Overall, we forecast 5 or 6 years of healthy growth for the entire digital music market. How much of that market is mobile will depend on a number of key factors, not least price.
XM: The guys at Mobhappy predict that: “Full-track music downloads over mobile will largely fail, leading operators and content providers to finally realize there are other aspects to mobile music”. What do you think?
JW: Reading that article, I can only agree that IF price and user-friendliness are not sorted out, full-track OTA downloads will never take off as a mass market service. Operators and record companies need to work together to set the price at the right competitive level to stimulate demand. OTA downloads cannot command much of a premium over wireline downloads, as the value-add is pretty minimal. Maybe some teenagers may think that downloading the latest music track from a certain artist is an essential activity that cannot wait a few hours, and so those few may be prepared to pay a substantial premium for the service. But, for the majority of people, if an OTA download is twice the price or five times the price of the same track bought online using a wireline connection, then most people will be happy to wait until they are at home and can download the track for much less. With iTunes setting the $0.99 USD / £0.79 GBP price point as an industry benchmark, we believe that MNOs will be limited to pricing OTA downloads in the $1 to $2 Dollar (approx £1.50 GBP) range in order to remain competitive. MNOs may think this sounds low, but if it successfully stimulates high demand and the MNOs then manage to win considerable market share, establishing themselves as a major route to market for record companies, then the prices should lead to a solid boost to ARPU through growing volumes of downloads.
XM: Lately, I hear many speak about the decline in the ringtones market, is this correct? What is the reason for this trend? What about ringback tones?
JW: Yes, we believe so - let’s face it, if full track downloads are priced at only 1 or 2 dollars, who will want to pay $5 bucks for a ringtone? Of course, we do not forecast instant overnight destruction of the ringtone industry, no, as there will still be huge (and growing) demand in markets where music download services are not yet available. Ringtones and ringback tones will continue to grow in the huge Asian markets (China, India, Thailand, Bangladesh, Pakistan, Indonesia, etc) and in other regions, but in 3G markets such as Western Europe, as OTA music download services proliferate, ringtone prices will surely collapse. Demand for ringtones will diminish in these regions over the coming years.
XM: How does the mobile music industry affect the global music market?
JW: The overall value of the worldwide music industry has been in decline for several years, falling from a high-point of $39.7 billion USD in 2000 to just $32.1 billion USD in
2006. However, we believe that the value of the global music market is set to reverse and grow again back to $38.8 billion USD by 2011. The reason for the growth in the market is the increased consumption of digital music. Revenue from physical sales of music (CD singles and albums) will continue to decline, but the value of digital music will grow over the coming years. Mobile will contribute to this growth, but as mentioned previously, it all depends on getting the price and marketing right.
John White will be here next Thursday for more talkin' about the music market. If you can't wait, you can read more info regarding the report on Digital Music Future by Portio Research, you can follow the link.
Thank you John and see you next week! :)
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