By Joshua Chaffin Financial Times

Edgar Bronfman, Warner Music's chief executive, is warning the mobile phone industry to improve its music offerings or face losing out in the burgeoning market to Apple, Google (NASDAQ:GOOG) and other new competitors.

Mr Bronfman argues that mobile phone manufacturers must make their phones easier to use as music devices and move beyond ringtones to embrace new and more imaginative products if they are to fuel growth of the $2bn business.

"With Apple's iPhone innovation and Google coming in, if the mobile phone industry doesn't respond with highly competitive offerings, they're going to watch their share of the opportunity diminish," Mr Bronfman told the Financial Times.

Music executives are looking to the world's 3bn mobile phone subscribers as a vital source of growth for an industry still suffering the consequences from its failure a decade ago to recognise and adapt to technological change.

Warner shares fell last week to an all-time low of less than $8, well below the $17 level at which it floated two years ago. Richard Greenfield, an analyst at Pali Research, on Monday predicted that Warner shares could fall to $5 amid a further erosion in compact disc sales, the industry's biggest source of cash.

While digital downloads have grown rapidly in recent years and now account for 15 per cent of Warner's total revenues, they have failed to offset the losses in the physical business.

Music executives have also found themselves at the mercy of Apple, which has used its clout as the maker of the iPod to impose a regime of low and uniform prices.

"What happened took people by surprise and it took me by surprise," Mr Bronfman said of the speed of the CD market's collapse, but he declined to address Warner's share performance.

Mr Bronfman and his private equity partners, which together control about 70 per cent of Warner's shares, have been mulling a range of strategic options that include securitising Warner's music publishing catalogue, making another offer for rival EMI or going private. However, the turmoil in the credit markets has made many of those options more difficult to pursue, and none appear imminent, a person close to the company said.

In the meantime, Warner and other music companies believe mobile phones offer the best hope to generate new growth and establish a rival to Apple's dominant iTunes service. "The music industry has never had the opportunity before to address 3bn subscribers," Mr Bronfman said.