Proactive Industry Participation and Improved Networks Likely to Create Active Music Experience in the European Mobile Music Markets

Proactive Industry Participation and Improved Networks Likely to Create Active Music Experience in the European Mobile Music Markets

Popularity of Master Tones and Full Track Music will Accelerate Revenue Growth in these Markets over the Next Six Years

LONDON, January 17/PRNewswire/ -- Advances in technology have enabled participants in the music industry to
participate in a parallel market for audio equipment and thus create the
mobile music markets. Innovations ranging from Sony's Walkman to the 'it'
gadget of the hour - Apple's iPod avidly market music on the move but, it's
the mobile handset which has the added advantage of combining both
communication and entertainment (music) while allowing customers to share
music in a secure environment.

With mobile handsets playing music as ring tones or message tones or even
entire songs through downloadable applications, the music industry's motto of
easier accessibility to larger audiences will become a reality. The closed
nature of cellular networks make it an ideal environment for secure
intellectual entertainment property. This attracts music publishers who will
not lose royalties or copyrights as is often the case when sites use
loopholes to share music files. In fact, large publishers such as the Warner
Music Group and EMI are optimistic about being present in these markets.

The European mobile music markets are expected to grow rapidly. The
deployment of general packet radio service (GPRS) and 3G networks by most
European operators will be key catalysts to this market growth. From Euro
1.56 billion in 2004, the revenues in these markets are expected to reach
Euro 7.85 billion in 2011. In fact, the market is expected to grow to a level
where the ringtones segment alone is expected to be worth Euro 3.01 billion
with full-track music market likely to exceed ringtones at Euro 4.83 billion
by 2011.

This market scenario for music developed when operators and music
publishers realised that it was possible to convert songs into concise
ringtones and use them on mobile phones to alert customers on incoming calls
or message alerts. Today, with a population of approximately 400 million,
Western Europe offers a huge opportunity in terms of market size and scope
for mobile operators, especially since the markets are mainly addressed
through ringtones.

"Improved cellular networks that allow the delivery of over the air (OTA)
full-track music as well as better quality master ringtones/real tones, are
creating a paradigm shift in the way customers experience music," explains
Frost & Sullivan (http://IT.frost.com) ICT markets Industry Manager, Pranab
Mookken. "Also, the active involvement of key participants in the music
industry is a direct result of the recognition of mobile networks as secure
and interactive delivery channels for multiple music applications."

The traditional value chain of content creation, production,
manufacturing and its sales and marketing through distributors, wholesalers
and retailers adds to the systematic chaos of the music industry. The strong
(but slowly declining) market for purchase of physical copies of music, is
being simplified by the mobile and online music options revolutionising the
music industry's value chain.

Large record companies are still concentrating on the fast moving
consumer goods (FMCG) model of selling physical copies but are also today far
more comfortable licensing their content to aggregators and third-party
labels when it comes to mobile or online music. Also part of the value chain,
software companies and mobile handset manufacturers are working closely with
these specialist record companies and aggregators to ensure digital rights
management compliance on their respective handsets in an attempt to profit
from mobile music mania.

The mobile music markets also increasingly benefit independent record
companies because it will allow these companies to retain a large part of the
distribution chain. Their disadvantage of the lack of a physical distribution
chain will be negated in the mobile music medium, which allows them to bundle
multiple labels in a single store, thus offering a one-stop shop to their
customer.

Although it is a popular opinion, the usage of mobile music services is
not restricted only to the youth. While this is the traditional target
audience for most mobile operators and independent mobile music service
providers as the average age of the first-time mobile customer has dropped to
as low as 11-15 years of age, the record labels and operators are looking at
older customers as trends in consumer purchase change.

The purchasing patterns of the older customer segments tend to be more
consistent with regard to type of content and usage. Operators are now even
attempting to reach out to the much oldest customer segment, by customising
and innovating service offerings, to include patriotic tunes and songs,
gospels/hymns and classical mobile music.

"As with any rapidly evolving technology, cannibalisation of mobile music
applications are inevitable, seeing older versions such as monophonic
ringtones fading out to make way for only polyphonic and master tones market
by 2011," notes Mr. Mooken. "Another threat in these markets is the
consolidation that could occur among smaller content aggregators and music
service providers as large record labels enter these markets. However, by
building better relationships with mobile operators through offering bundling
of different products and by constantly innovating, participants can flourish
in these markets."

Despite certain hiccups, the European mobile music markets are likely to
show immense revenue and growth potential. Their case is aided by the
overwhelming cooperation from the music industry, technological advances that
improve cellular networks and consistent demand for music from all almost age
groups. In fact, the demand is going to be so overwhelming, it is expected
that the mobile music medium will soon outrun popular mobile entertainment
media such as video and TV.

If you are interested in a virtual brochure, which provides
manufacturers, end users and other industry participants an overview of the
latest analysis of the European Mobile Music Markets, then send an email to
Srividhya Parthasarathy , Corporate Communications at
sparthasarathy@frost.com with your full name, company name, title, telephone
number, fax number and email. Upon receipt of the above information, an
overview will be sent to you by e-mail.

European Mobile Music Markets

B636-65

Background

Frost & Sullivan, a global growth consulting company, has been partnering
with clients to support the development of innovative strategies for more
than 40 years. The company's industry expertise integrates growth consulting,
growth partnership services and corporate management training to identify and
develop opportunities. Frost & Sullivan serves an extensive clientele that
includes Global 1000 companies, emerging companies, and the investment
community, by providing comprehensive industry coverage that reflects a
unique global perspective and combines ongoing analysis of markets,
technologies, econometrics, and demographics.

Media Contacts:

Europe:

Srividhya Parthasarathy
Corporate Communications
P: +91-(044)-52044668
E: sparthasarathy@frost.com

Americas:

Mireya Castilla
Corporate Communications
P: +1-210-247-3830
F: +1-210-348-1003
E: mireya.castilla@frost.com

India:

Abha Kaul,
Corporate Communications
P: +91-0129-2510311
E: akaul@frost.com

Asia Pacific

Sarah Lourdes
Corporate Communications
P: +603-6204-5878
E: sarah.lourdes@frost.com

Australia:

Sharmin Jassal
Corporate Communications
P: +61-2-8247-8900
F: +61-2-9252-8066
E: sharmin.jassal@frost.com

List of keywords in this press release: Europe, mobile music, ringtones,
monophonic ringtones, polyphonic ringtones, real tones, master tones, over
the air, OTA, full-track music, streaming downloadable applications, general
packet radio service, GPRS, 3G networks, mobile operators, handset
manufacturers, music publishers, research, information, market, trends,
technology, service, forecast, market share

List of Key Industry Participants: O2 UK, Virgin Mobile, Orange, Telia
Sonera, Vodafone, 3 Hutch, KPN, Wind, Ericsson, Motorola, Samsung, Nokia,
Melodeo, Qpass, Packet Video Networks (Alcatel), Shazam Entertainment,
Musiwave, Gracenote, EMI, Sony BMG, Universal Music, Chrysalis, Warner Music
Group

Source: Frost & Sullivan

Media Contacts: Europe: Srividhya Parthasarathy, Corporate Communications, P: +91-(044)-52044668, E: sparthasarathy@frost.com; Americas: Mireya Castilla, Corporate Communications, P: +1-210-247-3830, F: +1-210-348-1003, E: mireya.castilla@frost.com; India: Abha Kaul, Corporate Communications, P: +91-0129-2510311, E: akaul@frost.com ; Asia Pacific: Sarah Lourdes, Corporate Communications, P: +603-6204-5878, E: sarah.lourdes@frost.com; Australia: Sharmin Jassal, Corporate Communications, P: +61-2-8247-8900, F: +61-2-9252-8066, E: sharmin.jassal@frost.com

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