Mobile radio hits right notes with cellphone users

Ringtone sales are flat and full-track mobile download services are falling on deaf ears. But streaming wireless music offerings may be hitting the right notes.
A recent study from TNS Global Telecoms found that 43% of all mobile users listen to some form of music on their phones, and 73% of smartphones double as music players. And while the use of MP3 players on phones is up 78% in the last year, mobile radio uptake has seen a whopping 140% increase.
TNS – which polled an astounding 16,000 consumers in 29 countries for the study – also found that 45% of users list AM/FM as one of the top three factors in purchasing a mobile phone. Meanwhile, a recent study from the Pew Internet & American Life Project found that 17% of U.S. mobile users play music on their phones, nearly matching the 19% who use mobile e-mail or surf the wireless Web.
Side-loaded tunes account for much of that activity, it seems. But an increasing number of listeners are tuning in to streaming mobile stations including satellite radio from Sirius and XM as well as terrestrial stations.
“The majority of our subscribers are still listening to music, and we’re actually seeing generous growth of live, local stations,” said Daren Tsui, CEO and co-founder of mSpot, which powers streaming audio and video services for a host of carriers including Sprint Nextel Corp., Boost, Bell Mobility and Telus. “Some people are gravitating from commercial-free mobile music to live stations. The overwhelming category is still urban and hip-hop.”
Streaming services are easy to operate, and don’t require users to choose between a mobile service and a PC-based offering like iTunes. Just as importantly, though, “non-interactive” streaming services – that is, radio-like services that simply push tunes to listeners – can be far cheaper than downloads or interactive, on-demand offerings, because the royalty structure is different.
“(Non-interactive) pays out differently; royalty fees are not as onerous in that model,” Tsui explained. “Fully interactive, where you get to choose what you listen to, (those royalties are) a lot more expensive. … The subscription model right now, if you look at services like Napster, are like $11 or $12 a month. You add that up and that’s around $150 a year, and that’s pretty spendy for music.”
Which is why non-interactive may be a good fit for advertising. A handful of players are already experimenting with such models, delivering images or marketing messages on a phone’s screen while the user listens to tunes, or audio pitches between songs. It’s that ad revenue that is attracting traditional radio stations that that are seeing their audiences dwindle as the channels for accessing music multiply.
“The radio is a hugely underrated media tool which has suffered at the hands of TV music channels and the Internet,” TNS’s Matthew Froggatt noted. “This new outlet through mobile phones may help to sustain its life well into this millennium.”