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Weekly Mobile Breakdown: Mobile Ads Driving Mobile Music Industry

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Tina Products/Markets Analyst
October 11, 2012

As you may already know, mobile content is a big industry, with a 2012 revenue of $2.5 billion and projected 2016 revenue of $7.0 billion. Last week, eMarketer published an article on increasing revenues of mobile music, video, and games (of the three, mobile gaming currently brings in the highest revenue, but that’s a story for another time). Within mobile music, the revenue share of ad-supported music is expected to increase through 2016 while the revenue shares of music downloads and subscription-based music are expected to decrease, in the U.S. at least.  Nevertheless, U.S. mobile music revenues for all three types are expected to increase dramatically.

 

As a side note, last month, European mobile operator Telefonica O2 announced it was increasing pay-out rates to merchants on mobile transactions to drive mobile billing adoption.  Operator billing, a useful service for selling to demographic groups without credit cards (such as young consumers), was previously too costly of a service for businesses selling low-margin products.  Telefonica O2’s higher mobile transaction payout rates are predicted to increase mobile sales of one particular low-margin good in Europe: music. (I say Europe because Telefonica O2 does not operate in the U.S.).  Mobile music is expected to see slower revenue growth this year in the U.K. and Western Europe than in the U.S., but it would be interesting to see how Telefonica O2’s move would pan out for the mobile music industry in Europe.

 

Mobile music is expected to bring in high revenues in mobile content and mobile advertising.  Judging by the numbers below, those who will see the greatest boon from this mobile music boom will be providers of advertising inventory, that is, providers of mobile music streaming technology.  Considering that music streaming services are currently few in the mobile space, perhaps we will see more pop up in the next few years.

 

 

 

Based on the charts above, below are some key highlights and takeaways I think are important for mobile marketers & advertisers to consider.

KEY HIGHLIGHTS:

  • Ad-supported music has largest mobile music revenue share in the U.S. at 68.7%, will increase to 86.2% in 2016.
  • Ad-supported mobile music revenue to increase 5x between 2012 and 2016, from $295 million to $1.45 billion in 2016.
  • Mobile music downloads revenue to increase from $60.5 million in 2012 to $100.4 million in 2016.
  • Mobile music is expected to be a $1.7 billion industry by 2016.

 

KEY TAKEAWAYS:

  • There is much money to be made in mobile music, particularly in music streaming—even Apple is getting into the music streaming business.
  • Mobile ads, and not subscriptions or downloads, are the biggest revenue driver in the mobile music industry.
  • Mobile music streaming technology looks like an attractive space to be in at the moment.

 
 

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