ABI Research: Ringing in the Changes: The Explosive Growth of Mobile Music Downloads

According to ABI Research, "the market for full track music downloads to mobile devices was twenty times larger at the end of 2005 than it was twelve months earlier." A new report found that "global revenues from over-the-air (OTA) downloaded full track songs last year were $251 million, up from $12.4 million in 2004. ABI Research forecasts that by 2011 this figure will be $9.3 billion."

Ken Hyers at ABI Research outlined five prerequisites for a successful mobile music download service:

• A 3G network capable of delivering the product
• A distribution mechanism: effectively a mobile music store that can deliver the content to the customer, verify that the handset can accept the content, and ensure that users are paying for it
• An agreement between an operator, one or more record labels, and possibly a content aggregator; (in North America, operators - there are currently only two in this field, Verizon and Sprint - tend to partner directly with record companies, while overseas, content aggregators are frequently included in the equation as middlemen);
• A robust DRM scheme that also allows users to move tracks easily between devices; and
• Handsets with sufficient memory and feature-sets to support music downloads and transfers. This demand pleases handset manufacturers, who are only too happy to build high-margin extras into their new products.

Hyers said, "You also need people willing to buy OTA content,. Over-the-air downloads will be relatively less successful in North America because of the high penetration of PCs. Overseas (particularly in Asia), PCs are less prevalent and the mobile phone is more so. There wasn't even a Japanese iTunes store until Q4 of 2005. That's part of the reason KDDI sold 30 million mobile tracks last year in Japan alone."