Elin Elkehag, Ericsson's strategic product manager for Advertising, says: "In the long run users may not be willing to pay high premiums just because a service is mobile. Subsidizing these services by adding advertising will not only be a core funding element, but also an effective way to get their customers to use new multimedia services."

But Elkehag warns that it is vital not to alienate customers with poorly targeted campaigns. "If I like Britney Spears, I'm not interested in an advert for Twisted Sister or Metallica. Personalizing and targeting is really crucial to get the consumer to perceive the service as information and to value it more than advertising."

Ericsson takes a holistic approach in helping operators put together advertising-funded multimedia offerings. Elkehag says: "We're helping operators to take advantage of a business opportunity by providing the technical solutions, and by connecting them to the advertising industry in a smooth and efficient way."

While mobile multimedia has taken off in Asia, customers in Europe and the US have been slower to embrace new mobile services. But advertising can play a key role in encouraging new subscribers to adopt music services through various forms of subsidization. Staffan Ljung, Ericsson's head of Music and Entertainment Solutions, says: "Although multimedia has not been as successful yet in Europe and the US as in Asia - especially Japan and Korea - the direct revenue benefit has been proven by many leading operators such as Hutchison, that have managed to convert 10 to 20 percent of their European customer base to paying music subscribers."

The indirect value of mobile entertainment services lies in the lower customer cost of acquisition and reduced churn. "The operator 3's customers in Sweden have created more than a million personalized play lists, which means these music customers really have strong emotional attachments to their service provider," Ljung says.

Ericsson has helped operators such as 3, O2 and AT&T to deliver mobile music successfully, with both its Napster branded service and a white-label solution that allows operators to brand the service themselves.

"Swisscom is a fantastic example," Ljung says. "With the Napster-Ericsson service they have shown that it's possible to create a rich subscription service, which they've had phenomenal success with."