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U.S. Wireless Mobile Music Service Forecast

Wireless over-the-air (OTA) music services offer mobile phone users a convenient way to buy music and provide the music industry with an exciting new distribution channel. While adoption remains low today, IDC forecasts that U.S. wireless music services will have over 50 million users and generate more than a billion dollars in revenue in 2010, just 5 years after appearing in late 2005.

"Wireless OTA music services offer music fans a convenient source of music and bring the music industry new opportunities to reach consumers and drive revenue. Wireless music services are still in their infancy in the U.S., but are expected to quickly gain traction during the forecast period. 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's program manager.

According to an IDC survey, a total of 22 percent of respondents indicated that they would buy at 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 25-44 indicated they would buy four or more tracks. It�s this 25-44 age group that IDC analysts believe could be the core base of wireless over-the-air service users, in particular those who may be new to digital music services.

In order for wireless music services to reach critical mass, a variety of music-enabled devices need to first find their way into the hands of wireless subscribers. This has not happened so far due in part to limited offerings from the handset vendors. However, the shift towards a greater variety of music-enabled mobile phones at various price points is already in motion. IDC expects music-enabled mobile phone shipments to reach nearly 60 percent of all handsets shipped in the U.S. by 2010.

"OTA mobile music storefronts are emerging as one of the most important new channels for fans to discover, purchase, and enjoy full-track music and related content. 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. IDC expects that OTA tracks at about $2.00 each will emerge as a sustainable price point as long as mobile storefronts are well-designed and offer a wide selection of music, and the music listening experience on the device is comparable to MP3 players," says Lewis Ward, IDC's research manager.

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