Radio Delivered By Mobile Phones Quickly Becoming Commonplace
June 22, 2005

The convergence of mobile phones and digital music is fast approaching and a slew of content delivery agreements will likely escalate the pace.  As the race reaches full-speed, dozens of companies believe that delivering exclusive digital content and radio to phones could be as big as both the camera phone and the ringtone phenomena.

Apparently, customers actually want this service too.  In a recent survey conducted by AOL (which is currently talking to wireless providers about offering its online radio stations), more than 50 percent of respondents said they would listen to radio on their mobile phone.  Experts believe radio services will eventually reach two billion wireless subscribers worldwide, opening up a huge new revenue stream.  According to market researcher IDC, mobile phone radio should generate a paltry $70 million in sales in 2005. 

In December, Sprint began the race, becoming the first carrier with a commercial mobile phone radio service.  On June 14, Sprint then expanded their content delivery options by signing an agreement with Sirius Satellite Radio, once again pushing mobile radio into the headlines.  "Mobile phones are always with you," Nancy Beaton, a general manager at Sprint, told BusinessWeek. "Because customers are familiar with how the phone works, adding radio can be very intuitive."

Sprint isn't the only company with live service either.  In Washington, DC and Los Angeles, about 300 people are testing out Motorola's iRadio service, which is expected to launch by the end of the year.  iRadio is expected to cost $5 a month, and will initially let customers download hours of radio programming through a computer.  When the company's new line of phones arrive this fall, the service will be able to deliver radio through the phone, just as if it were a satellite receiver.  Nokia is currently testing mobile video delivery over a new network, which is expected to launch in 2006, and should include audio-only channels as well.  

Most recently though, Sydus, a mobile content technology supplier in Singapore, announced that they had teamed up with Virgin Radio to jointly launch a 3G mobile radio service.  The service, reportedly the first of its kind in the world, provides mobile radio to more than 90 countries.  Just two days after the launch, users on six continents had listened to the service.  The majority of the downloads thus far have come from Russia, the UK, Italy, and the US, with more coming from Thailand, India, Sweden, the Czech Republic, Turkey and Finland.  Customers of the new service have already logged nearly 500,000 listening minutes.  This is not the first partnership between the two companies; earlier this year, Sydus signed an agreement to provide Virgin Radio UK with both the front and back-end systems to enable mobile phone users around the world to listen to the company's rock and pop stations.

Before mobile radio can become truly commonplace though, several technology hurdles must be eliminated.  If the service becomes too popular too quickly, current networks could be overloaded.  Also, any location that has poor mobile phone reception could cause a radio broadcast to become unavailable.  Providers must also decide on a set of standards for the network and for the phones themselves.  One interesting approach to this problem would be to create an entirely new network.  This option, being pushed by both Nokia and Qualcomm, could rely on existing terrestrial radio stations and would be far cheaper than reworking existing networks.

There are other opportunities for both record labels and radio companies to get more directly involved as well.  Radio is traditionally how people learn about new music and has been a big contributor to the growth of the ringtone and ringback market, as well as the market for digital downloads of music.  The ringtone market currently stands at about $500 million and has been growing in leaps and bounds.

While the future of these technologies is far from set, and the major players have yet to be determined, one thing is for sure - as the number of mobile phones continue to increase and the availability of digital music services grow exponentially, the consumers will ultimately have their choice of music, whenever and wherever they want.

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Manny Simon
VP/Adult Formats,
Republic Records

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