Welcome to the second part of the digital music coverage. Today, John White of Portio Research Ltd will be visiting here. If you missed the first part you can follow the link.
Let's welcome John:
Hi John. Thank you for coming back, how are you? :)
Hi Xen, thanks a lot, I’m doing great thanks.
Who are the big players in the global music market? Are there new players in the neighborhood at the era of digital music?
Obviously the music industry is dominated by the big 4 record companies - Universal, SonyBMG, Warner and EMI. Much of the decline over recent years has been attributed to the rise of digital music and the increase in unlicensed file sharing (first Napster, then LimeWire and so on) and illegal peer-to-peer file sharing. It goes without saying now that the music industry looks at developments online very seriously. With the rise of YouTube and MySpace and similar sites becoming major players in the marketing of music, and with increasing numbers of mp3 download sites available, some online players stand to become very influential in the music market. If MNOs get it right and build market share in the download market they too stand to become quite significant in the music market.
What is the future of retail music sales in comparison to the mobile music?
We forecast physical CD sales to continue declining and digital sales to grow steadily.
What are the estimates for music handsets market?
Without giving away too many of the details from our new study, we forecast a very strong future for the sales of mp3 enabled mobile handsets. We estimate that there will be over 1.7 billion mp3 enabled handsets in circulation by 2011, representing a little over 40% of handsets in use worldwide at that time.
Will the mobile kill the stand-alone MP3 players?
Not exactly, no. We believe that the mobile handset will become the primary portable music device for the mass market, but as the whole digital music market grows, so sales of stand alone mp3 players will continue to grow also – so it’s good news for everyone! There will also remain to be a hard core of dedicated music fans who will carry both, as the stand alone players will maintain a lead over mobile handsets in terms of playback quality, storage capacity and so on.
What can you say about the importance of music to the mobile telecoms industry and the impact of digital music on 3G services?
If the services are structured right and priced appropriately, we believe that digital music has the potential to become a fairly substantial ARPU booster for operators. Music will never generate the kind of revenues that SMS makes, but as a value added non-voice service music could become a great revenue booster for operators.
Any examples of marketing best practices in the music/mobile music industry?
Yes, but we’ve written another entire report about that, called ‘Strategies for Creating End-User Demand for Mobile Data Services’, so readers will have to check that out on our site for more details!
What can you say about the positioning of major players and advertising opportunities in the digital music market?
We see substantial opportunities for major brand advertisers to use mobile music as a way to move more advertising spend onto the mobile platform. We believe there are great opportunities to sponsor or subsidize downloads and we think youth-focused brands could make a real impact here.
What are the key drivers for mobile music appeal?
The appeal of music is widespread. To be fair, as with most other services on the mobile platform, the youth segment will surely lead the market as the early adopters, but it would be foolish and short-sighted to think the market starts and ends there. Music is widely enjoyed by all ages from 9 months to 90 years old, so mobile music services should be designed to appeal to all age groups and demographics. Services need to be easy-to-use, cheap, quick and reliable, and the spread of content on offer must appeal to all tastes. Driving the uptake of OTA services will need innovative marketing, which may be where the advertisers come into play, and mobility will need to be positioned as complimentary, not competitive to wireline services. If consumers can believe there is little difference in price between downloading OTA or on the PC at home, they will download OTA whenever they feel like it.
Do culture and orientation influence mobile music consumption? How?
Sure, in all the obvious ways that culture influences taste in music.
Which are the most developed mobile music markets?
Japan, South Korea, the UK, the USA is fast coming on.
What is going to be the next *big thing* in the mobile music market?
Seeing if the price is right!
Also, I just thought about it, do you want to say something about the new iPhone?
OK Xen, I'll tell you what I have to say about the iPhone - but you'll have to tune in next Thursday for it!
Thank you John!