Priyasha Bhatt, a 20-something student, working part time with a Noida (Uttar Pradesh)-based ITeS firm, loves music and knows her hip-hop and R&B. She has to travel quite a bit everyday to reach her office from college. And music on her mobile phone helps her endure the bumper-to-bumper-traffic-ridden drive with Buddha-like equanimity. ?Sometimes I wonder how difficult live would have been without my music phone,? she quips. ?Buying an iPod or MP3 is out of question as my pocket doesn?t allow that. Also, one more gadget will occupy some more space in my backpack. In fact, I?m quite comfortable listening to music on my cell phone. It allows me to listen to FM radio as well, which isn?t possible with a CD player or an iPod,? she adds.

At a time when the telecom industry is in a tizzy over dwindling average revenue per user, known as ARPU in the telecom jargon, music is like the proverbial rainbow at the end of the tunnel. Take this. Of the total annual mobile data (non-voice) earnings of about Rs 6,300 crore in India, nearly Rs 1,500 crore comes from the entertainment segment and music constitutes a sizeable chunk of that.

?Music is a major contributor to the growth of non-voice mobile services revenues, accounting for $227 million (Rs 908 crore) in 2006 and expected to reach $476 million (Rs 1,904 crore) in 2007,? says Pradeep Gupta, managing director, IDC India.

Typically, a mobile operator in India would net about Rs 247 in ARPU in a month (2007 estimates). This realisation has, in fact, slipped from Rs 270 in 2006 and is expected to go further down to Rs 238 by 2008. But as the revenues from mobile music are expected to go over $700 million (Rs 2,800 crore) by the end of 2008 (the market is growing at over 40% year on year), mobile operators sense a huge opportunity waiting to be tapped.

Except for SMS, which is the biggest contributor to the VAS (value-added services) segment, no other service adds as much to the revenue kitty of mobile companies as does music downloads. In 2006, the country?s telecom sector had made $501 million (Rs 2,004 crore) in revenues from SMSs. The revenues from MMS and other data services, in contrast, were a meagre $24 million (Rs 96 crore) and $8 million (Rs 32 crore) respectively.

?After voice telephony and text-based services, mobile music is one of the largest revenue generators, with one out of three users using VAS for entertainment,? says Idea Cellular chief marketing officer Pradeep Shrivastava.

Indeed. From simple beeped-out ringtones in the beginning, the mobile music market has blossomed into a full-fledged entertainment service, offering options like dialer tones, background music, downloads and music on demand. Industry estimates peg the annual music downloads on mobile at 200-300 million, and it is set to double in the next 15-18 months.

Mobile music is also helping people express their unique identities through the music they choose to greet their callers. Experts foresee a lot more action in the years to come. Buongiorno, which providers mobile VAS and digital marketing services globally, is working on an automated music creation WAP portal, which will help mobile users create their own music and download it.

Milind Pathak, co-CEO of Buongiorno, says, ?There are three stages of growth in mobile music. Most countries, including India, are currently at the listener stage. Then comes the sharing stage, where people want to share the music with their family and friends. The last stage is discovering and acquiring new music, and that is going to be the future.?

All over the world, ring-back tone is most popular VAS component among all mobile music services. However, experts believe in the time to come people may want a reverse of the ring-back tone. ?If you call up a person, you listen to a song of his choice,? points out Pathak. ?A caller may not like that song. He may want to listen to the music of his choice.?

Trends indicate mobile music reach cuts across age and gender barriers, with subscribers hailing from different socio-economic strata. As young people take to mobile phones like fish to water?the number of buyers in the youth segment has grown from 8.3 million in 2005 to 27.6 million in 2007?the prime target for mobile companies, no doubt, is the youth.

The trend is nothing new though. In 2006 music sold through mobile phones took over the physical musical sales, and to an extent this can be attributed to piracy-free music on mobile. During the year, physical sale of music generated $168 million (Rs 672 crore) in revenues, compared with mobile music sales of $227 million (Rs 908 crore). ?Mobile music not only introduces new formats of music consumption, but brings with it a piracy-free environment and an ability to reach millions of customers,? says a Bharti Airtel spokesperson.

In India, about half of the mobile music revenue is cornered by the operator. While about 15% goes to the government in the form of taxes, the rest is divided between the aggregator and the music label.

In European markets, however, the aggregator?s share is higher than it is in India. The reason being that VAS providers in Europe spend a lot on marketing, advertising and infrastructure development. In India, on the other hand, barring a few exceptions, the service provider does all the marketing.

Bharti Airtel has over 2 lakh Airtel Easy Music retail outlets that cater to the music needs of its customers. The operator offers its customers over 25,000 songs in 20 languages. Likewise, Idea provides over 1,000 options to music lovers on its portal. Other players like Vodafone and Tata Indicom have also come up with innovative offerings in the mobile music segment.

In a bid to improve its VAS offerings, BSNL has launched mobile radio service on a subscription for Rs 25 per month. The service enables subscribers to listen to their favourite songs at Re 1 per minute. Many companies are even planning to tap regional markets. Reliance Communications? mobile radio service is available at similar rates in eight Indian languages, including Malayalam, Tamil, Kannada, Hindi, Gujarati and Punjabi. ?Mobile radio service bridges the fundamental barrier between a mobile and a radio,? says Mahesh Prasad, president, applications, solutions and content group, Reliance Communications. ?Effectively every phone becomes an FM-like radio phone for those who have missed out on buying an FM-enabled phone. Shortly we will be also be providing access to regional content similar to various radio stations that are popular across India.?

A handful of players also offer a song identification service, which enables users to identify the artist and album information of songs being played in the immediate surrounding. The huge potential in the mobile music segment can be gauged from the fact that FM-enabled phones are now available in the market for less than Rs 2,000.

When telecom service providers are offering so much for their subscribers, how can handset makers be left behind? According to IDC, of the 60.6 million handsets sold in India in 2006, 15% were music-enabled. In the previous year, however, only 8.4% of the 25.5 million handsets sold were music-enabled. Again, of over 36.5 million handsets sold in the first half of 2007, 21% were music enabled.

Motorola?which began its foray in music-optimised handsets and accessories with MotoROKR E6 followed up by a series of devices like MotoROKR Z6 and MotoSLVR L9?is showing off the stylish side of music with the introduction of MOTO U9. The ROKR Z6 and L9 enable users to enjoy a wireless experience with Bluetooth-enabled stereo headphones. ROKR Z6 lets consumers ?plug and play? with any personal computer running Windows Media Player.

Features such as integrated digital camera, music player and FM radio are driving users to upgrade their handsets. After conducting a global study that found that of the total user base, over 60% listen to music, Nokia recently launched two N-series devices preloaded with 10 inter-national and Indian music videos. Both the devices have 8GB capacity, enabling users to store up to 6,000 songs. (In fact, Nokia?s N-series is a family of convergence mobile devices supporting digital multimedia services such as music playback, video-capture, photography, mobile gaming and Internet services.)

The Nokia study found 60% of the users users who do not own an MP3 player or a music phone expect to buy the latter in the next one year, against 40% who want the former. In India, while 60% of those surveyed think digital music playback is very important in a mobile phone, 19% think it?s important. The ratio is 35:39 in Thailand, 17:19 in China, 14:21 in Korea, 17:15 in Hong Kong, 13:8 in Australia.

In the UK too, music phone penetration is higher than that of MP3, and gradually the landscape is changing in France, Germany, Italy and Spain too, where mobile music sales are slowly matching those of MP3 players. Mobile music revenue in the UK is an estimated 30-40% of the total VAS revenue, which is slightly less in India.

Experts believe mobile music will continue to be a major revenue generator for mobile companies, although its market share may fall marginally from 40% in 2006 to 36% in 2011, as new forms of entertainment, such as mobile TV and video services begin to grab consumer interest. The bottomline is that the telecom boom will continue to revolutionise the way people buy and enjoy music.