Wireless consumers are poised to up adoption of OTA music services by end of the decade; drivers include broadband deployment and music-enabled handset penetration.
Posted Jun 19, 2006
The adoption of wireless over-the-air (OTA) music services is now low, but there will be rapid growth by 2010, according to IDC's report "U.S. Wireless Music 2006-2010: Forecast and Analysis." The report predicts that there will be more than 50 million users of these services, providing more than $1 billion in annual revenue by the end of the decade.
Twenty-two percent of respondents to the IDC survey say they would purchase least one track from their service provider within the first three months of availability, assuming they had an appropriate handset. Eight percent of respondents age 25 to 44 indicated they would buy four or more tracks. It's this age group that IDC analysts say could be the core base of wireless OTA service users, in particular, those who may be new to digital music services.
"Key drivers for future growth include music-enabled handset penetration, deployment of broadband wireless networks, increased marketing efforts, bundling and cross-promotion of various music-related services, and driving flat-rate pricing schemes," says Lewis Ward, IDC research manager, wireless and mobile communications: entertainment.
Handset offerings to date have been limited, but the shift toward a greater variety of music-enabled mobile phones at various price points is under way, according to IDC. Ward expects music-enabled mobile phone shipments to reach about 60 percent of all handsets shipped in the U.S. by 2010.
"By the end of this year the number of U.S. OTA customers will be approximately half that of online music-service users, but may surpass them by the end of the forecast period," says Susan Kevorkian, IDC program manager, consumer markets: audio. While the wireless downloads tend to be twice as expensive as those offered via iTunes, customers have shown that they are willing to pay a premium to have them available on wireless handsets, according to Ward.
"People pay $3 for ring tones, and those are only 30 seconds long," Ward explains. "So paying $2 for a three-minute song is much less expensive. Some carriers charge more than $2, but Ward expects competition to force those prices down. However, he doesn't expect prices to fall below much, if if at all, below $2.
"The other trend that we're starting to see, though it's just in its infancy, is the integration of music and other services on wireless handsets," Ward says. "Some carriers are just beginning to offer radio services, TV, and music recognition technologies. This is a very small market right now, but it is growing."
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