Mobile-Music Boom in China Boosts Cellphone-Service Shares

The Wall Street Journal reports that the "exploding popularity of mobile music in China is boosting revenue for Chinese cellphone providers and Internet companies and helping fuel a run-up in their share prices."

According to the article, "color ring-back tones," where "subscribers download select songs to their cellphones from the Internet and hear them played when they make a call until the recipient picks up" is one of the most popular forms of mobile music in China. Other services include ring tones, or music that replaces a phone's traditional ring, and downloads of songs for general listening.

BDA China estimated that wireless-music services in China generated US$247 million in revenue last year, and "expects the market to continue to expand strongly this year, driven by promotions by operators and investors."

China Mobile "reported revenue of 6.99 billion yuan (US$872 million) last year from its color-ring-back-tone business and other so-called wireless application protocol business, more than 2.5 times the 2004 figure."

Lu Sun at Lehman Brothers said, "China Mobile has been our sector top pick in 2006 as we see continued strong growth in overall [cellphone] subscribers and also wireless data services, including the mobile music sector." She added that "Tom Online, a leading Internet company based in Beijing that provides multimedia products and services, derives at least half its revenue from music-related products, including color ring-back tones."

Tiger Hou at iResearch Consulting Group in Beijing, said the company will have "a lot of chances to expand its business" as the market grows.