New rules hit China mobile music downloads

Sales of music tracks direct to mobile phones fell to US$703.2 million (A$845 million) in 2006, down more than eight per cent compared to the previous year, reported research firm In-Stat.

"China's mobile music market slowed down in 2006 as a result of service provider regulation initiated by the Chinese Ministry of Information Industry and mobile operators," said In-Stat analyst Raymond Yan.

The tighter consumer protection regulations were imposed on mobile service providers in summer 2006. Thousands of mobile subscribers had complained that they were being charged for services or downloads which they had not requested.

With the introduction of the new rules, customers have begun to receive clear notification of new mobile services before they start. Additional protections include a preset upper limit on monthly charges.

The new rules immediately produced a dramatic drop in revenues from mobile services like ring-tones and music downloads.

"Even though the service provider regulation has affected the mobile music market in the short-term we believe it is positive for the continuous healthy development of the wireless value-added service market," said In-Stat's Yan.

The analyst firm forecasts that China's mobile music market will begin to recover from the service provider rule changes this year.

However, further challenges lie ahead over the next three years as the proportion of iPod-style music phones is predicted to rise from 45 per cent to 85 per cent of all handsets.

"The increasing popularity of music phones is an uncertain factor for the mobile music market, since mobile users can download pirated music from the internet and upload it to their phones," said Yan.

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