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Mobile - the Future of the Music Industry

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Youth survey predicts end of the CD in 5 years, as mobile becomes the retail channel of the future

The mobile phone is set to become the retail channel of the future for music fans according to a report published today by 3.

The report investigates how young people are using new technology to revolutionise the way they access and listen to music and reveals some startling results for the music industry:

- Music purchased on mobile is the fastest growing music format - up 100% on 2005
- Mobile could overtake computer based music purchases within 5 years
- Six out of ten under 24 year olds have purchased music via a mobile
- 'Downtime' is becoming the new commerce space for music retailing - two thirds say they buy on public transport, and half say they're interested in buying new tracks on the way home from a club
- Paying for music via mobile bill preferred to cash or credit cards by 50% of under 21s
- CD will die out within five years say 60% of under 24s
- Downloading has environmental benefits according to 85% under 24s
- Fastest growing channel

Music sales on mobile are booming, up 100% on 2005*. 3 is the UK's biggest mobile music retailer with 75% of the market, its 3.75 million UK customers now buy over one million audio tracks and music videos per month, with audio sales accounting for one in ten of all chart singles bought in the UK. In fact if mobile sales continue to grow at the same pace they could rival - and potentially overtake - computer based downloads in just five years.

Mobile has also driven the resurgence of the music video - 3 customers have watched over 20 million music videos since 3 launched the service in 2004 - prompting calls for sales to be chart eligible (at present, download sales of audio tracks, but not videos, are counted towards the charts).

3's sales show the youth sector contains the heaviest users of music over mobile, so it commissioned an in-depth study of 2000 16 to 24 year olds to explore their attitudes towards music. The results explain the growing popularity of mobile and indicate the future is bright for the British music industry.

The 'I want it now' generation - music must be immediate
More than 60% of under 24s say they have downloaded music on a mobile - an incredible figure bearing in mind the market barely existed two years ago. This is due to the fact that they are no longer happy to wait until they visit their high street record shop to buy a new track - they want instant gratification with 76% of them stating that when they hear something they like they want it immediately. In fact it seems that they aren't even willing to wait until they get home to download it on a computer with more than four out of five of them stating that mobiles are a great way of buying music as 'you don't have to wait to get hold of what you want'.

Evenings and 'downtime' the new music retail space The 24 hour accessibility of music on mobile is proving to be revolutionary - 3's own sales data shows that the most popular time of day for purchasing music is between 6pm and 11pm when most traditional music shops are closed. The research indicates that this is being driven by a large degree of impulse purchase with up to half of respondents stating that they had bought a track on their mobile after hearing it played in a club or bar.

Time spent travelling is becoming an increasingly important to music sales with almost two thirds of under 24s stating that they buy their music while on the move on public transport.

24 hour music shop in your pocket
Even better for the industry, it seems that mobiles encourage people to experiment with more kinds of music - three quarters of respondents stated that downloading music on their mobiles prompts them to buy music they wouldn't normally listen to. Perhaps this new-found open mindedness is due to the ease of which they pay for music over mobile - almost half of 19-21 year olds would prefer to pay for their music via their mobile bill than by credit card or cash.

CD to die out and record shops to become the preserve of over 30s only
CDs are going the same way as the cassette according to the under 24s - six out of ten of them predict that the CD will die out in the next five years. This death of the physical format will lead to a decline in the face of the high street record shop with a similar number foreseeing a time when they will be frequented solely by the over 30s. One in five already say they would buy all their music over mobile if they could.

Downloading music will help save the planet
The ecological credentials of today's young pop consumers play a major part in their belief of the inevitable death of the physical format. A massive 85% of under 24s think that downloading music can help save the planet by reducing the amount of packaging, waste, and carbon emissions involved in producing and transporting CDs to shops. In fact ecological reasons were cited as downloading's second biggest benefit after convenience.

New golden age of video
The pop video is about to enter a new golden age based on the opinions of today's young music consumers. The video was a format that had fallen into staid middle age, however the YouTube era combined with their accessability via mobile download has reinvented the music video and they are as popular as audio downloads on 3. And this sector of the market is set to grow fast, with 68% of respondents stating that they would buy a video download rather than an audio download of a track if they were the same price. The industry has already recognized this change, as of January video downloads are expected to count towards the official chart.

Graeme Oxby, Marketing Director of 3, comments, "This research confirms what our own sales are telling us - the mobile has swept in behind desk-bound digital music downloads to offer a much more flexible music service that appeals to a generation that spends the majority of its free time away from a desk. For today's music consumers, nothing less than music on demand, 24/7, will do."

Customers of the 3 MusicStore can download music from the website or the mobile, and enjoy it on their phone, PC at home and MP3 player.