Mobile subscriptions which offer unlimited music downloads on a rental basis are expected to surge in popularity and will provide the majority of mobile revenues derived from original recordings, according to a new report from Juniper Research.
According to the report, the market for subscription-based music rental services will reach $3.3 billion by 2012, eclipsing the market for paid-for original recordings.
Report author Dr. Windsor Holden, said: "Music rental services such as those offered by Omnifone are incredibly ´sticky,´ in that once consumers have taken the time and effort to build up an extensive playlist, they will be increasingly reluctant to unsubscribe from that service and from the operator, thereby providing a significant boost to ARPU levels."
However, the report also states that as 3G services are rolled out in emerging markets, then full-track download sales will mushroom, with the volume of downloads in the Indian sub-continent alone rising from less than 2 million in 2007 to nearly 480 million in 2012.
"India and China represent a tremendous opportunity for the mobile music industry," said Holden. "Both have experienced quite remarkable levels of ringtone and ring-back tone adoption, and as more full-track services are deployed, then it is likely that the mobile handset will become the most popular personal music player in these and other emerging markets."
Other findings from the Juniper report include:
— The global market for end-user generated mobile music revenues will rise from $8.9 billion in 2007 to nearly $17.6 billion in 2012
— Total revenues from original recordings delivered to the handset (on both a paid-for and rental basis) will increase from $960 million in 2007 to $6.1 billion in 2012
— Revenues from ringtones/realtones will peak in 2010, subsequently declining as a result of competitive pricing allied to a steady migration to ad-funded and/or self-created ringtones
— The report praises the iPhone´s user interface, but argues that the company´s decision to eschew 3G in favour of a greater battery life was incorrect
Juniper Research says it assesses the current and future status of mobile music services based on interviews, case studies and analysis from representatives of some of the leading organisations in the growing mobile music services industry.