Providing music for mobile phones is not enough for Rock Mobile, and the Chinese digital music service provider now wants to expand into other areas like music on the Internet and other jazzy perks for mobile phones to stay competitive.

 

Rock Mobile also has another vision: acquiring as many as five firms this year, trying to grow the company's business with a quick pace and prepare for a public listing in three years.

 

The firm, founded by the record heavyweight Rock Records from Taiwan, raised US$30 million from several venture capital firms including Walden International, Goldman Sachs and Legend Capital at the end of December.

 

"The biggest challenge for Rock Mobile is how to maintain our competitive edge among so many competitors," said Yang.

 

There are more than 2,000 mobile service providers and due to its relationship with Rock Records, Rock Mobile is in a unique position for offering entertainment content.

 

Service providers offer downloadable content to mobile subscribers, and then share revenues with mobile carriers. This is one of the major channels for music companies to make money in China.

 

Sales in the mobile music market reached 2.66 billion yuan (US$330 million) in 2004 and the number for 2005 is estimated to have hit 6.4 billion yuan (US$763 million), according to the market consultancy Analysys International.

 

The sales of traditional records and CDs were just 2 billion yuan (US$240 million) in 2004.

 

However, Yang believes that only having an advantage on music on mobile phones is not enough to maintain an edge in the market, which is why he supports expanding to other areas such as Internet music, mobile Internet portals, and other content on mobile phones.

 

Rock Mobile has identified several potential targets with technologies or channels in those areas and some deals are underway.

 

"To prepare for the takeoff of music distribution on the Internet, we must act now," Yang said.

 

The company's capital will also be used to purchase music copyrights from international record giants.

 

Yang estimated that the cost of buying the copyrights and recording rights of all music from the top five record giants is at least 10 million yuan (US$1.2 million).

 

Chinese consumers generally download music with the help of search engines, so top search firms like the domestic firm Baidu, Yisou under Yahoo! and other websites all provide search results of music for free.

 

However, the top Chinese provider Baidu was sued by several record companies and their agencies since mid-2005, prompting many search engine firms to delete links to music with copy rights or charging consumers for downloading music.

 

Yang expects the company's revenues can double or even triple earnings from 2005 to US$50 to US$60 million this year.

 

A public listing is also in the near future for Rock Mobile, of which more than 70 percent is owned by venture capital firms.

 

(China Daily January 27, 2006)