Mobile Music 2009 / 2010

The collapse of mobile music

in western markets
For more information
about the Music Ally
Mobile Report, go to:
www.MusicAlly.com
 Europe

• Digital music is growing around the world

• In Europe digital grew by 36.1%
aggregately (much higher than in other
established markets like the USA and Asia)
• But mobile music has not been contributing
to this growth in Europe
• Mobile music has been falling around the
world and Europe is no exception
 Europe
Digital
Country Mobile 2008 2009 Mobile
2008

UK +58% – 10.6%

France +49% +16.7%

Germany +10.4% -42.2%

Italy +2.5% -31.6%

Spain +7.8% -7.7%

 European Advanced Models

• Despite the decline of mobile music

revenues in Europe, post 2008 it will be
Europe and not Asia which will clearly
drive future innovation through new
access models
• There has been significant development in
this area in the last year with Europe as
the leading territory for pioneering these
models
 European Advanced Models

Firm Service Country

Nokia Comes With Music First launched in UK

Sony Ericsson/Telenor Play Now Plus Sweden

TDC Play Denmark

TeliaSonera Telia Music Cross-Scandinavian

Orange Musique Max France

SFR Pass Music Live France

 Advanced Models
However – even these advanced models are
struggling. Comes With Music case study:

• Only 23,000 active users in the UK (as of

March 2009).
• Downloading 200 to 300 tracks on average in
the first few weeks.
• Only 20% of downloads are Over The Air.
• Local catalogue accounts for around 35% of
downloads in CWM markets.
• CWM customers are downloading 20 times
more back catalogue than Nokia Music Store
customers.
 Advanced Models

• Combined online and mobile download

service, FREE to all Danish subscribers of
TDC ISP or TDC mobile.
• In 6 months, Play was outselling iTunes in
Denmark by a factor of 10 to 1.
• In 9 months, 60 million tracks were
downloaded via TDC Play, the churn rate
was reduced among active PLAY users by
30-40% on the mobile platform and by
approximately 60% on broadband and they
received over 350 features in the media.
• However, 9 in every 10 downloads were
online rather than to mobile (Sep 2008).
 Europe: conclusion

• Increasingly pioneering new access models.

• However current situation is general decline
in mobile music income in most major
markets.
• Two of the key players, Nokia and Sony
Ericsson, don’t appear to be reversing this
trend yet.
 USA
NO LONGER THE No.1 PHYSICAL MUSIC MARKET
(Japan is now larger)

DIGITAL MUSIC WAS UP +16.5%

MOBILE FELL FOR THE FIRST TIME BY -9.8% AND IS

LIKELY TO FALL FURTHER IN 2009
 Asia Pac

• Digital music in Asia is still growing; up aggregately

by 26.1% in 2008
• But mobile music is likely to drop significantly in
2009 in established Asian markets
• Mobile music growth will come from BRIC countries
• India and China show huge potential; but from very
small beginnings
 Asia Pac

Digital
Country Mobile 2008 2009 Mobile
2008

China +45.2% +13.5%

India +38% +30.4%

Australia +34% +12.1%

S. Korea +14.4% -15.4%

 Asia Pac: Japan

JAPAN IS ONE OF THE HEALTHIEST MUSIC MARKETS IN THE WORLD

IN 2008 IT BECAME THE No.1 PHYSICAL MUSIC MARKET

WITH FULL MUSIC TRADE VALUE UP BY +0.9%

DIGITAL MUSIC GREW BY +23.5% IN 2008

AND MOBILE WENT UP BY +17.5% ACCORDING TO IFPI BUT...

 Japan

... RIAJ FIGURES REVEAL THAT Q4-08 WAS THE

SAVING FACTOR FOR MOBILE MUSIC AND 2009
WILL LIKELY SEE THE FIRST EVER DECLINE IN
THIS SECTOR
 Latin America

• The Latin American music market shrunk

by almost -5% in 2008

• But its digital music sector grew the most

out of any continent, it increased by 46.6%

• Latin America includes Brazil, a remarkably

well performing music market

• And Mexico, the ironically underperforming

mobile music market which is home to the
telco operator giant América Móvil
 Latin America

Country Digital 2008 Mobile 2008 2009 Mobile

Brazil +79% +78%

Mexico +1.3% -24%

Chile +146% +137%

 Room for growth still
We predict that 10/14 exists for 2009, as we
of examined mobile have predicted across
music markets will 4 examined markets.
decline in 2009. However they are
Together these much smaller
territories accounted territories, driving
for $1,346.4m of slightly over $97m of
mobile revenues mobile music revenues
generated in 2008. in 2008.
 BRIC

• Growth is evident in BRIC nations, as in other

underdeveloped markets like Chile

• However even BRIC nations drive very little mobile

music value to Western labels and rights holders

• In China this is mainly due to local operator

monopolies retaining the majority of mobile music
profits: China Mobile generated $1.7bn in ringback
tone revenues in 2008, while IFPI labels generated
just $44.3m in movile music revenues in China the
same year
Variable Consumption Ringtone Consumption
BRIC USA/GERMANY
Variable Time
Most mobile music territories have
been built on ringtones. But the
consumption of high-margin mobile
products like ringtones doesn’t seem to
have a plateau, rather the consumption
habit can be more appropriately
depicted as a bell curve since formats
like these eventually get trumped by
the next generation of innovations.
The time to reach maximum consumption,
and the maximum level itself, is variable
by territory and is greatly influenced by
external market forces:
• In Germany and the USA more
sophisticated 3G substitute products are
already available, and the perception of
ringtones as rip-off models has accelerated
the decline in consumption.
• In BRIC countries more people are being
enabled to purchase mobile content, this is
evident by an increase in mobile
subscriptions and improved access to
digital payment mechanisms. The initial
novelty of 2nd generation products will
start wearing off, and more exciting 3G
offerings will eventually compound the
demise of these formats even in BRIC
nations.
 Apps
• The outlook for advanced markets in the
medium term is bleak
• However Apps may hold the key
• They won’t replace the revenues lost via
ringtones as a pay-per-unit format
• However the latest wave of iPhone apps allow
commerce features like in-app payments
• These developments and others have viable
implications for mobile entertainment
 Apps
The Apple App Store was launched a full
year ago in July 2008. It has since:
• Generated over a billion app downloads
• Populated its store with over 50,000 apps
• and expanded its reach to 40m devices
around the world that run the iPhone OS
BlackBerry App World is also a key app
store player:
• It has reached 2,000 apps
• It is expanding to Italy, France,
Germany and Spain in July, with India
and Brazil next on the list
• Developers for this platform have been
keen to develop programs to meet
international consumer demands
T-Mobile have revealed positive stats
about the Android Market app users:
• 4/5 users download new apps at least
once a week
• Users have each downloaded over 40
apps from the Android Market
• 80% of users browse the web on a daily
basis
 Apps can be harnessed by artists
in many ways:

• Via games like Tap Tap Revenge; NIN made a branded

version with developer Tapulous
• As free promotional tools; Snow Patrol gave away a
‘digital booklet’ app that generated 30,000 downloads in its
first week
• As a D2C communication method; Kyte makes
community and news oriented apps for UMG artist fans to
stay connected with fans
 Mobile Music 2009 / 2010
• Our Mobile Music report contains a detailed
analysis of the state of the music industry
and mobile music players in each of the key
markets.
• Examination of key trends in access model
services and other notable events which are
shaping the mobile music industry
worldwide.
• A look at the rapid success of apps and
what they mean to the music business.
• All of this comes at a price of £499 with a
discount for Music Ally members. If you are
interested, please contact Anthony:
Email: Anthony@MusicAlly.com
Phone: +44 207 420 4320