U.S. Mobile Music Markets

SUMMARY

Efficient Management of Processes to Aid Mobile Service Providers in Capitalizing on Thriving Mobile Music Market

Mobile music services are emerging as major revenue contributors in the mobile communications sector and carriers need to manage their portfolios efficiently to capitalize on the booming opportunity. They need to consider various applications, legacies, network technologies, billing, outsourcing, and development mechanisms for presenting an effective product offering to end users. Besides this, they also need to decide on their level of involvement in the development and delivery processes of mobile music applications. It is necessary to strike a viable balance between devoting a team entirely for this process, or outsourcing to a third-party and working on a revenue sharing basis.

This Frost & Sullivan research analyzes different mobile music applications such as monophonic polyphonic

and, master music ring tones, streaming music, and other applications that create value for mobile subscribers. It examines different applications, platforms, business models, and revenue sharing agreements in the industry and identifies drivers, challenges, restraints, and application trends.

Mobile Music Services Prop up Falling ARPU in the Mature U.S. Mobile Market

The U.S. mobile market is verging on maturity and now with the commoditization of voice minutes, intense price wars are translating into declining average revenue per user (ARPU). In a bid to improve profits under these circumstances, mobile operators are focusing on offering value-added non-voice services. "Offering a rich and satisfying mobile music experience constitutes an important part of the strategy of achieving greater returns per subscriber and also contributes to customer loyalty," says the analyst.

The music industry, which is already battling piracy issues, is increasingly turning to mobile networks as an effective and secure distribution channel for their music, thus boosting the prospects of the mobile music market. However, a plethora of intellectual property laws regarding music could lead to reduced revenue and increased complexity. The limited storage space of mobile handsets and the large footprint of music applications also deter their downloading.

Master Music Tones Poised to be Prime Drivers of Mobile Music Markets

"Aiming to make handsets a preferred mode of listening to music, the mobile handset industry is enhancing their audio playback and storage capabilities to accommodate master tones and MP3 downloads," says the analyst. This move is significant since master music tones and other high-end applications are set to emerge as key contributors to the U.S. mobile music industry, having already posted impressive growth rates in 2003 and the first half of 2004. This growth is likely to continue and soon phase out monophonic ring tones.

With the introduction of sophisticated mobile phones, operators are expected to be able to increase adoption of mobile music services. With growing consumer awareness about mobile music applications and a satisfying user experience, mobile operators can be assured of greater returns per subscriber.

Frost & Sullivan Growth Partnership Service

Based on extensive and in-depth research, real-world consulting work, and new theories tested in hundreds of companies across many industries, Frost & Sullivan has evolved its Growth Partnership Services (GPS) program that provides established and emerging firms with powerful growth visions. Moving beyond token mission statements, GPS provides an actionable vision to growth consulting partners by illustrating how key intelligence and strategic research based on defined goals can guide day-to-day behavior and overall company direction. The foundation of Frost & Sullivan's GPS includes:

• Assisting companies to reach their full potential in the core business
• Providing growth strategies to help companies expand into related businesses
• Preemptively redefining the core business during market turbulence
• Applying the Frost & Sullivan framework to identify and address common mistakes resulting from misaligned corporate strategies
• Recommending growth management strategies through continuous partnership

To maximize the potential for growth within a firm's internal and external environment, Frost & Sullivan consultants can facilitate the creation of strategic programs that deliver improved market success. Frost & Sullivan's strengths lie in combining strategic understanding with market expertise and applying these with absolute commitment to its clients' growth.

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY

• Scope of the Study
  • An Introduction to the Market
  • Market Segmentation
  • Forecast Methodology
• Summary of Findings and Conclusions
  • Summary of Findings
  • Key Conclusions

2 U.S. MOBILE MUSIC MARKET

• Market Definitions and Overview
  • About Mobile Network Technologies
  • About Access Level Technologies
• Mobile Music Potential
  • Importance of Mobile Music
  • Mobile Music as an Integral Part of a Mobile Operator's VAS Strategy
  • Target Market for Mobile Music
• Market Topology
  • Different Categories of Mobile Music
• Important Market Dynamics
  • Drivers
  • Restraints
  • Challenges
• Strategic Evaluation and Analysis
  • Mobile Music Value Chain
  • Mobile Music Business Models
  • Mobile Music Revenue Models
  • Market Strategies for Mobile Music
• Demand Analysis and Market Forecasts
  • Forecast Methodology
  • Demand Analysis
  • US Mobile Music Forecasts

3 MONOPHONIC RINGTONES

• Definitions & Overview
  • Overview of Monophonic Ringtones
• Demand Analysis & Market Forecasts
  • Demand Analysis
  • Market Forecast

4 POLYPHONIC RINGTONES

• Definitions & Overview
  • Overview of Polyphonic Ringtones
• Demand Analysis & Market Forecasts
  • Demand Analysis
  • Market Forecast

5 MASTER RINGTONES

• Definitions & Overview
  • Overview of Master Ringtones
• Demand Analysis & Market Forecasts
  • Demand Analysis
  • Market Forecast

6 STREAMING MUSIC AND OTHER MOBILE MUSIC APPLICATIONS

• Definitions & Overview
  • Overview of Streaming Music And Other Mobile Music Applications
• Demand Analysis & Market Forecasts
  • Demand Analysis
  • Market Forecast

7 2004 FROST & SULLIVAN AWARDS

• 2004 Market Leadership Award
  • Market Engineering Leadership
• 2004 Mobile Music Brand Management Award
  • Mobile Music Brand Management
• 2004 Mobile Music Interactivity Solution Award
  • Mobile Music Interactivity Solution
• 2004 Mobile Audio Middleware Platform Award
  • Mobile Audio Middleware Platform
• 2004 Mobile Music Product Suite Award
  • Mobile Music Product Suite

8 KEY INDUSTRY PARTICIPANTS

• Content Providers and Platform Vendors with Application Developers
  • Faith West Inc
  • Infospace Mobile
  • Zingy
  • Kanematsu
  • Nellymoser
  • Tao Group
  • Xingtone
  • Musikube
  • Versaly Entertainment
  • 9 Squared
  • Beatnik
  • QPASS
  • America Online (AOL)
• US Wireless Operators
  • Cingular Wireless
  • Verizon Wireless
  • Sprint PCS
  • AT&T Wireless
  • ALLTEL
  • Virgin Mobile USA