A large number of potential new revenue sources are out there, experts say, but they are slow to come onstream due to complex music licensing agreements, particularly in fragmented Europe.

The emerging convergence between the high-tech and music worlds was clearly visible at the 38th MIDEM music trade fair, the international music industry's most influential annual gathering that ended here Thursday.

For the first time ever, the movers and shakers in the music industry got together with the giants of the cellphone, wireless providers, Internet software and electronic worlds to talk about how they could work together for their mutual benefit.

Top executives from Scandinavia's mobile phone giants Nokia and Ericsson came to town, as did British telecom group Cable and Wireless, Wanadoo, the Internet service provider of France Telecom, NTT's DoCoMo and computer giants Microsoft and Apple, to showcase their latest technologies.

No one wants to lose out in the sea change under way, and there was brisk business reported during the five-day MIDEM fair as record labels and artists agreed licensing deals for their music with the new high-tech players.

Organizers said about 8,800 participants attended the event, about a thousand of them for the first time.

Music executives were optimistic the new revenue streams offered by the latest digital technology advances would give a welcome boost to falling music sales.

The record industry has been hard hit by piracy, which it blames for a 10 percent drop in CD sales worldwide last year.

"The past year was significant as a vibrant online marketplace started to come through with the launch of Apple Computer's iTunes store," EMI digital development senior executive Ted Cohen said here.

But Europe's complex network of rights agreements is slowing things up. Senior executives of both Apple and Roxio, owner of the recently relaunched Napster online paid music service, criticised the lack of any pan-European agreement between record labels, music publishers and the various rights and royalty collection agencies that operate in each European country.

A deal to streamline rights clearance in Europe would be "the holy grail," Roxio chairman and chief executive Chris Gorog told MIDEM attendees.

One potential solution to the music rights "nightmare" was unveiled during the MIDEM week. The Association of Independent Music's Rightsrouter is a one-stop licensing service for European music services that has trialed licensing deals with Roxio and a Chinese broadband service.

Both Apple and Roxio were vague here about precise European launch dates for online music sales. But both US companies said they were aiming to cross the Atlantic sometime early this year.

The online music store stakes are high. Apple's vice president of applications and Internet services Eddy Cue revealed the company's iTunes online music store had sold over 30 million song tracks since its launch in April last year and sales are "definitely going way up and going up every month."

Cue also highlighted that the record labels are much keener to make their music available through iTunes than they were last year. "We went back to the labels again one to two weeks ago and got a more positive reception," he said.

Apple is also benefiting from having the most-used music-playing device with its iPod, which Cue said today has a 31 percent US market share by units and a 50 percent share by revenue.

Competition in online music though is hotting up and Apple's success has opened the door to a rash of other hopefuls, desperate not to lose out in the race. Coca-Cola's MyCokeMusic.com service launched at the start of this month and after a rather rocky start has started to tack up sales.

Another potentially important revenue source for the music industry is ringtones.

With 1.5 billion cellphone handsets currently in use globally and 133 billion SMS text messages sent around the world in 2003, the mobile business is potentially enormous for music, Ralph Simon, chairman of MIDEM's first-ever Mobile Music Forum, emphasised.

Ringtones are already big business for telecoms, particularly with young users who are happy to pay to keep up-to-date with the latest pop hits. But although the number of downloads is huge, the amount of money they generate is disproportionately small, telcoms operators here complained.

NTT DoCoMo, the leading Japanese mobile operator, however, has proved you can make a lot of money out of music and games, its senior executive Takeshi Natsuno said here.

By offering a simple entertainment-based service, DoCoMo has signed up more than over 40 million paying subscribers in Japan and 1.5 million abroad for its I-mode Internet mobile service in just five years.

The European market could become even bigger than Japan, Natsuno argued. "Consumer behaviour patterns don't change much from country to country. People in Europe like downloading ringtones and playing games just as much as people in Japan," he stressed. He believes the key to success is to keep prices reasonable and the technology easy to use.

SPACE.WIRE