Mobile Music Growth Curbed By Music Industry - Survey

CANNES, France -(Dow Jones)- Mobile telecommunication service operators feel record companies are demanding too high a slice of revenue from mobile music services, according to research released Sunday.

The demands of the industry for revenue share from nascent mobile music services, such as ring-tones, are holding back the development of the sector, according to 83.7% of mobile operators questioned in research by Informa.

This was the single-largest factor cited by respondents to the research, which surveyed mobile industry executives.

Other factors limiting the growth of the industry include the user experience of services already on the market and the cost to the consumer of data services over mobile phones.

Ring-tones are by far the largest revenue generator in the mobile music market, according to the research, accounting for more than half of all revenue.

Ring-back tones, full-track downloads and streaming audio combined account for less than half of revenue.

Respondents also said neither ring-tones nor other mobile music services were "critical direct revenue generators," but were important as marketing or customer retention tools. Around 17% said ring-tones were a "critical" direct revenue generator, with about 37% saying they were "negligible."

Around 7% said mobile services excluding ring-tones were "critical" as a direct revenue generator.

The research was released at the Midemnet music industry conference in Cannes, France, as mobile operators, music companies and Internet service providers discussed digital music.

Research from the International Federation of the Phonographic Industry, or IFPI, released last week, found mobile services accounted for 40% of the total digital music market. The overall digital music market leaped in value in 2005 to $1.1 billion, from $380 million in 2004.

Mobile operators hope music will help them recoup the billions spent on third-generation telecom licenses. Record companies, whose revenue have fallen for five years due to piracy and illegal file-sharing, are keen to promote legitimate digital music services.

-By Jessica Hodgson, Dow Jones Newswires; +44 207 842 92 93; jessica.hodgson@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 23rd January 2006