The ubiquitous mobile phone is metamorphosing into a jukebox and mobile music sales - ringtones, caller ring back tones and full song downloads - have crossed sales of physical formats in the country.
According to data from industry associations, mobile music sales stood at about Rs 1,200 crore (Rs 12 billion) in 2006, as compared to Rs 756 crore (Rs 7.5 billion) recorded by music shipped over the conventional mode.
"Mobile operators are betting big on music as it is emerging as the biggest money-spinner under value added services, next only to SMSes,'' BPL Mobile CEO, S Subramaniam, told Business Standard.
"The increase in subscriber base and the availability of music compatible handsets are major reasons for the increase in digital music sales," he added.
The increased focus is confirmed by the fact that over 40 per cent of a telecom operator's advertisement budget is being used for promotion of music and handsets that can support them, Subramaniam said.
At present, a mobile operator's major revenues are from voice services. However, average revenue per user an indicator of the financial health of mobile companies is declining rapidly. Industry ARPUs fell to Rs 330 per month in the first quarter of this financial year, from Rs 370 in the previous quarter.
So let the music play on. "There is a rising market for mobile music, especially due to the affinity of Indians to Bollywood," said Gartner senior research analyst Madhusudan Gupta. "Music would be another revenue earner for mobile companies."
The mobile music sales is expected to surge to over Rs 3,750 crore (Rs 37.5 billion) by 2009, and with the industry adding around 7 million users per month, operators are seeing a huge opportunity.
VAS accounts for around 10 per cent of a company's revenues, of which music contributes about 4 per cent.
According to Gupta, the convenience of purchasing single songs, unlike buying a CD, and the ease to carry it around on a mobile phone has also made it a favourite. And operators have exploited this by rolling out music-enabled handsets, encouraging music downloads and offering FM and Internet radio services.
On the penetration front, CRBTs have made a 15-25 per cent dent, followed by ringtones with around 15-20 per cent, and the remaining can be attributed to full song downloads.
"Music is the second largest VAS service for us after SMS. Bharti Airtel's music portfolio is over 50,000 strong, including complete tracks, ring tones, ring-back tones and corporate jingles," a Bharti Airtel spokesperson said.
"Given the fact that music is neither handset- nor language-dependent, the market for music is growing," he added.
State-owned BSNL has recently awarded two contracts to Swedish equipment major Ericsson to host a mobile content download portal and a ring-back tone service. Reliance Communications, Idea Cellular, Vodafone-Essar are also betting big on music.
But is the music industry crying hoarse? No, says PricewaterhouseCoopers principal consultant Smita Jha. "On the contrary, mobile music is helping the industry to promote new movies and albums," Jha said.