Recent reports from telecom analysts suggest that revenues from customized ringtones have already peaked in many markets, and will start to decline over the coming years, making it imperative for market players, especially operators, to find novel ways of making consumers pay for mobile-music services.

"The market is in a transition phase," says Jonathan Arber, an analyst at consulting firm Ovum. "People are exploring new business models and big players are acquiring smaller independent companies."

Evolving trends in the mobile-music market are among the issues to be discussed at the January 27-31 MIDEM event in Cannes, the annual global trade fair for the music industry.

Although the mobile-music market - excluding ringtones - is still tiny, Arber says it is growing steadily and will become a large component of the digital music world.

Arber estimates the global market for mobile music will be worth about USD 3 billion by the end of 2008 and USD 9 billion by 2012. His forecasts are limited to subscriptions and track downloads.

In terms of regional markets, Asia-Pacific is currently the biggest mobile-music spender. "Asia-Pacific is at the forefront because of markets such as Japan and South Korea where mobile music is exceptionally popular," Arber says.

Moreover, emerging markets such as India and China, where mobile devices are hugely popular, are expected to propel growth for mobile-music offerings.

Market consolidation
The competitive landscape has also changed in the past two years: Ericsson is now offering Napster Mobile, ring back tone and white label mobile music solutions; Nokia has launched its own music store "Ovi" and acquired Loudeye; Microsoft snapped up Musiwave; and Motorola has recently bought Soundbuzz.

"Small independent companies that provide platforms and solutions for white-label mobile-music services are being acquired by the big players, which tend to put more weight behind them," Arber says.

He adds that the new alliances are seen as attempts to challenge Apple, whose iTunes success story remains unmatched in the digital-music market.

Right mix

"Not everyone consumes music in the same way, so it is about having a mix of attractive options," Arber says.

New business models - such as integrating the cost of a music subscription into the phone package and allowing unlimited music downloads for a flat fee - hold promise. "Things like these can potentially turn the market around and really drive growth," he says.

"Operators such as Vodafone are now accepting solutions from a variety of sources. Going forward, this is what's going to work. It is about operators enabling a greater range of options for consumers. They may not be the ones providing music downloads but they can still get revenues from data traffic or strike some kind of deal with the content provider."