Asian consumers aren't yet buying digital music to pack their iPods with sprawling collections of music, but they are splashing out on digital music in the form of mobile ringtones and ringback tones.
That's how Sudhanshu Sarronwala reads the state of the Asian market for digital music and he ought to know. The CEO of Singapore-based Soundbuzz -- which announced Monday it will be acquired by Motorola for an undisclosed sum -- runs an online music store and a mobile music business that offers ringtones, ringback tones and mobile song downloads in countries across Asia.
Motorola bought Soundbuzz after exploring ways to expand its MotoMusic service for cell phones beyond China, Hong Kong and Taiwan, and executives billed the takeover as a move that will make Motorola the largest seller of digital music in Asia. While details of the deal were not disclosed, Motorola plans to keep the Soundbuzz brand around and the mobile music service will continue to support handsets from a range of vendors, including Nokia, Samsung and Sony Ericsson.
There are fundamental differences between mobile music and music that's sold online by Apple's iTunes Music Store and other services, including Soundbuzz's online store. These online music services are about collecting songs and building a personal database of music that you like. Mobile music is something altogether different, and the offerings that prove most popular with consumers are constantly changing.
"At one time it was very polyphonic ringtone-dominated, that was maybe three years ago. Then about two years ago there was a good mix of truetones and polyphonic," Sarronwala said. "Now, you've got ringback tones, which are popular in India and Singapore."
Mobile music makes up the bulk of Soundbuzz's revenue, far outpacing sales generated by the company's online music store, according to Sarronwala. Some of those mobile music sales come from Soundbuzz's own site, while others come through white-label services the company operates on behalf of operators and others. (After the deal with Motorola goes through, the MotoMusic service will effectively be operated as one of those white-label services.)
Demand for these services is substantial. Sarronwala wouldn't disclose revenue figures for Soundbuzz, but estimated Asian demand for mobile music is easily worth "hundreds of millions of dollars" annually.
Whether Asia's enthusiasm for mobile music translates into online music sales for Soundbuzz and other services remains to be seen. Online song prices are generally too high and digital rights management too restrictive with many Asian music services to compete with pirated downloads. And iTunes, which has helped spur online music sales in Japan and Australia, remains unavailable in most parts of Asia.
Mobile music could perhaps fill this gap, offering Asian consumers a proven channel to purchase and download music. Indeed, Soundbuzz is seeing some demand for full-song downloads using mobile phones, but Sarronwala is skeptical that demand for songs will replace ringback tones and other offerings.
"With mobile, the use of the music is different compared with online. Online is all about private, database collection; on a mobile [phone], you use it for expression," he said.