Vodafone price cuts spur digital downloads

Lower data charges for music downloads will boost the digital music market

A fifth of music sales will be distributed digitally by the end of 2006, industry analysts Deloitte predicted today.

Vodafone's announcement this morning that it is planning to cut data charges for music downloads is likely to act as a catalyst in boosting the digital music market.

Digital distribution is occupying a growing share of revenues for the music industry and a reduction in data charges for downloading to phones will continue to boost this revenue stream and spur the use of mobile data, according to Deloitte.

Jolyon Barker, head of Deloitte's technology, media and telecoms practice, said: "Digital music sells best when sold in the most appropriate format for the end devices, as shown by the market for ring-tones (designed specifically for mobile phones and mobile phone networks) which is expected to generate over $5bn in gross revenues in 2006.

"A reduction in the cost of music over mobile phones should prompt a more dramatic change in the share of music sales by format, and we expect that a fifth of music sales will be distributed digitally by the end of 2006.

"A reduction in the size of full-track music files sent to mobile phones could further boost the market, making files quicker to download and using up less of the mobile network."

Barker predicted that Vodafone's cost cutting move will lead to an increase in the number of online music stores, and that a growing number will cater specifically for downloads to mobile phones over a mobile network.

The analyst also expects to see growth in the number of specialised online market channels catering to progressively smaller niches.

This could be done by creating sub-brands and speciality brands each of which could focus on a particular genre such as 'opera' or 'urban'.

"Speciality sites could also offer content at varying quality levels and in various packages, depending on the needs and preferences of their particular niche," said Barker.

"For example, opera lovers might demand CD quality downloads, and younger audiences might find renting music packages containing perhaps a half-dozen tracks more appealing and affordable than full albums."