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Digital Music Player Device Adoption Insights

The potential for mobile music is more attractive with subscription-based models, according to a new study by Pyramid Research. The notion that multiple digital music distribution models can coexist in the marketplace isn't new, but it's interesting to review Pyramid's rationale.

They estimate that the global market for a-la-carte mobile music would be worth around $2.5 billion to mobile network operators (MNOs) in 2011; with subscription models, the mobile music market potential swells to over $4 billion in 2011 (not including ringtones, etc.).

With a $1.99 weekly revenue derived from subscription services -- $103.48 annually -- and uptake of subscription services starting in 2007 at a rate of 1 percent of 3G subscribers (rising to 2.8 percent by 2011), subscription services would bring in an additional $1.64 billion for MNOs globally by 2011. Again, the total forecast revenues for combined a la carte and subscription mobile music services would therefore be worth just over $4 billion in 2011.

Pyramid believes that the mobile music market shows signs of significant promise for the coming years. One key indicator of the latent potential comes from the number of mobile music-enabled handsets that shipped in 2006. The assumption being, a demand inhibitor to prior growth was the lack of penetration for handsets capable of playing digital media.

Nokia shipped 80 million music-enabled devices in 2006 and Sony-Ericsson a further 60 million devices. Apple, by comparison, shipped only 39 million iPods in 2006 and has shipped 66 million units total since 2004. That said, it would appear that merely having the capability to play digital media doesn't necessarily directly equate to the potential for media sales.

The Pyramid report focuses on the way the Internet model for digital music consumption has influenced mobile models to date, how these models are not designed around the requirements of mobile operators, and what changes need to be made to ensure that mobile music is a leading revenue generator and driver of data consumption for MNOs in the coming years.

However, I believe that this market data demonstrates yet again the need for mobile service providers to look more closely at their value proposition, and associated consumer experience, before drawing any premature conclusions about the addressable market potential. MP3 players, and the Apple iPod in particular, are successful for a variety of reasons that are worthy of closer scrutiny.

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