BMI is embracing the burgeoning ringtone/mobile entertainment marketplace in the U.S. by establishing new licensing agreements for the performing rights of the musical compositions that the group represents.
BMI’s traditional business, licensing musical public performance copyrights for radio, television, cable and commercial establishments, has expanded over the past five years to encompass a growing roster of client industries ranging from Internet sites to digital music subscription services and portable wireless services. In the past six months, BMI, which licenses more than 2,300 web sites, has signed licensing agreements with leading new media companies including MSN, Yahoo!, pressplay and ringtone providers including Sprint PCS, Your Mobile, Zingy.com and Sonera Zed.
“Mobile entertainment, including ringtones and streamed and downloaded music accessed through cellphones and portable computing devices, promises to be one of the big growth areas in the digital music space,” said Richard Conlon, Vice President, Marketing and Business Development, BMI. “If the U.S. markets perform like the markets in Western Europe and Japan, we may be able to generate significant revenues. We’ve been proactively working with these companies for the past three years to help develop business solutions to cover our songwriters’ rights. “
Background on the Mobile Market
The U.S. mobile entertainment market is situated to follow the success of the European and Asian markets. Outpacing most predictions, mobile phone usage has been skyrocketing in the United States with more than 120 million cellular phone subscribers. This number is expected to grow to over 160 million by 2004. According to a new study by wireless researcher Upoc, 58 percent of all Americans aged 12 and up own a cellphone. The report also found that 51 percent of U.S. teens own a cell phone and 61 percent of all college-aged Americans own a mobile phone. It is estimated that over one billion ringtones will be downloaded in 2002 (Strand Consulting). Merrill Lynch recently predicted that the mobile phone content market will reach $25 billion globally by 2005, with a worldwide universe of 1.6 billion wireless web users. Merrill Lynch pegs the market at $1 per subscriber per month for content services.
The mobile entertainment market is still in its infancy but is expected to grow rapidly with m-entertainment revenues exceeding $12.6 billion by 2005 (McKinsey). Ringtone sales have already reached $1.5 billion in Europe and $300 million in Japan (CNET, Strand Consulting). In Japan, telecom NTT DoCoMo has used the mobile market to pre-promote new releases of recorded music to target demographics. NTT DoCoMo succeeded in converting more than 60% of their basic cell phone subscribers to over to wireless web subscribers. In Western Europe, both ringtones and graphics are available for download direct to cellular phones.
While ringtones have led the mobile entertainment boom, new products are coming to market quickly. Games, dating services, fast Internet access and answering recordings are the latest hot items. As wireless operators rollout so called “2.5G” and “3G” (third generation) networks, newer and more technically advanced products will emerge. Many of them use popular music as part of their appeal.
BMI’s agreements grant mobile entertainment firms the rights to publicly perform the approximately 4.5 million musical works in the BMI repertoire over both Internet and wireless cellphone delivery systems including wireless access protocol (WAP) and short messaging service (SMS). Both systems enable users to download or stream emails, specialized web pages, music and other content directly to their mobile phone. Once payment and performance data is received, fees collected from the public performances on the site will be distributed as royalties to the more than 300,000 songwriters, composers and music publishers BMI represents.