The recorded music industry has been struggling to find the right business model after the economics changed during the transition to online. Music content providers are moving some of their effort to mobile and have been relying on a mix of paid downloads and subscriptions for revenue. But analysts believe that advertising will be the biggest driver of revenues for these content providers in the mobile world during the next few years.

This year, operators who earn money from mobile music ventures will see their opportunities break into the following streams:

  •  Download 14.1%
  • Subscription-based 17.2%
  • Ad-supported 68.7%

eMarketer projections indicate that the mobile music industry, “excluding multiplatform services or sideloaded music” will reach $429.3 million by year end. In another 4 years, the industry value will reach $1.68 billion. By then, advertising will account for 86.2% of music content provider revenue.

While music has been the smallest component of the entertainment content revenue streams in mobile, the format is growing. This year, music will account for 17.1% of mobile content downloaded by consumers. By 2015, music will account for 24.4%. The sector remains smaller than video, 39.9% this year, and gaming, 43%.

eMarketer analysts also suggest that ad revenue and in-game revenue will grow at the expense of download fees in the mobile gaming world. By 2016, with a total value of $3.02  billion, mobile games will be relying on in-game revenue of 48.2% and ad revenue of 17.4%.

The eMarkter viewpoint suggests that consumers will be unwilling to pay for much content in the mobile space. As consumers have been increasingly trained to expect entertainment and services for little or no cost in the digital space, they make a ready audience for marketers who will bear the cost of providing mobile music, game and video content in exchange for the opportunity to promote their products and services.

[Source: Ad Support Is Future for Mobile Music. Emarketer.com. 4 Oct. 2012. Web. 15 Oct. 2012]