Despite competition from digital music players, schemes that relegate the mobile to the position of a mere storage device, and rampant disappointment in ringtones, Gartner forecasts a boom year for mobile music services (which it defines as basic ringtones, realtones and ringback tones to more sophisticated full track downloads and streaming). The amount of money mobile users worldwide spend on music delivered directly to their handsets will reach US$32.2 billion by 2010, up from US$13.7 billion in 2007.

Spending varies dramatically from region to region, with the market in Asia Pacific (including Japan) worth more than twice that in North America (US and Canada). Western Europe is the second largest region for mobile music, with total spending forecast to top US$9.1 billion by 2010, while North America is forecast to reach US$7.1 billion. Ringtones are so last year. Realtones are now the cash cow in these markets. They represent 65 percent of ringtone downloads in North America and 70 percent in Western Europe.

Growth drives are users’ desire to personalize their devices, and their demand for entertainment on-the-fly. So, does this trend play in the favor of mobile operators or record labels? Gartner says operators have a strategic advantage when it comes to delivering ringtones (they know the handset types and personal preferences, for example). But when it comes to streaming and full track downloads, they risk losing their edge to other players in the value chain, including record companies, handset vendors and solutions providers. Mobile access to iTunes, along with other digital music shops such as Microsoft’s upcoming Zune offering are positioned to compete directly with mobile carriers’ portals.

The only ace left in the operator’s hand may be the billing relationship and their close ties with the customer (which allow them to follow the clues users leave about their preferences, such as download history, click behavior and mobile search patterns). Now they need to forge the partnerships that will make use of that data – and finally solve the ever-present issue of DRM. Press release