Jan 14, 2010

Everywhere-Access Key to Paid Music Models

After a decade of declining revenues, the US recorded music industry is more determined than ever to reverse its sagging fortunes and return to the luster of the 1990s.
eMarketer forecasts that US consumer spending on digital music will increase at a compound annual growth rate (CAGR) of 11.04% in the next four years, reaching $4.56 billion in 2013, up from $3 billion in 2009. All of this growth will come from the online segment, which comprises track downloads, full album downloads, music videos, digital kiosks and subscription services.
“eMarketer expects the tipping point between physical and digital formats to occur sometime in 2010,” said Paul Verna, eMarketer senior analyst and author of the report, “Paid Music Content: The Answer Is Blowin’ in the Cloud.”

US Recorded Music Spending, by Segment, 2008-2013 (billions and % of total)

Paid music services are starting to shift their focus away from selling downloads and instead concentrate on granting users paid access to content—including the music libraries they already own. Apple, far and away the market leader in the digital music industry, has seen its iTunes ecosystem slow in growth, while cloud-based initiatives gather steam.

Apple iPod and iPhone Unit Sales and Revenues Worldwide, 2007-2009

The idea behind cloud-based music is to allow users to store collections on remote servers and access the content on all connected devices: computers, smartphones, netbooks, tablets, e-readers and game consoles.
“While the first generation of US digital music services was predominantly download-based, the next iteration is likely to be based around subscription models,” said Mr. Verna. “US consumers are growing accustomed to accessing digital content on remote servers via Web browsers. Extending this paradigm to music files is a logical step, and one that content owners are determined to make work.”

The full report, “Paid Content: The Answer Is Blowin’ in the Cloud” also answers these key questions:
  • What is the revenue outlook for paid music content online and via mobile?
  • How will cloud-based computing play into the music industry’s plans in the coming decade?
  • How do Internet radio and music video fit into the digital music sales cycle?
To purchase the report, click here. Total Access subscribers, log in and view the report now.

Check out today’s other article, “Android Surges Among Handset Purchasers.”