Wednesday, May 4, 2011

Music Revenue To Grow 60% In The Future?

Despite the official numbers by industry associations like the RIAA and the IFPI that show the music industry now has essentially a flat growth, there are still those that have extremely rosy predictions for the future.

In a recent article in the Telegraph, independent telecoms analyst Ovum forecasted what seems to be some unbelievable growth the music industry. According to the article,
"Ovum forecasts that globally, revenues from music subscription services will increase at a compound annual growth rate of more than 60 per cent from 2011 to 2015, as consumers recognise the benefits of being able to access millions of streamed songs for the price of a CD every month rather than owning individual downloads. Subscription growth will also be driven by technology giants Apple and Google which are expected to launch cloud-based digital music subscription services this year."
60%??? Now considering that the growth in the US in 2010 was only 3%, this prediction seems more than a tad optimistic. Okay, how do they figure? More from the article.
"Subscription music services are set to be a key driver of the boost to digital revenues, according to Ovum, an independent telecoms analyst. However, the music industry is not believed to maximising digital music revenues because of the amount of free music available online, including free internet radio services such as Pandora in the US.

Ovum analyst Mark Little said: “Digital music will experience what might appear to be healthy growth over the next five years, but there is a danger that this could mask the fact that the industry is not maximising revenue potential.

“There is too much free music available in the digital economy and not just the illegal kind. Free Internet radio such as Pandora or Grooveshark, and freemium on-demand music services such as Spotify, are offering free music without maximising advertising or premium subscription revenues for themselves or the industry.”
Too much free music? So how do they propose that all that free music be turned into paid music? As I stated in many blogs previously, I believe that the future of the music industry is predicated on micro- and even nano-transactions, where bank transaction fees fall by the wayside and music costs in the pennies rather than $.69 or $.99. The technology does exist, but it has to be widespread and common before that happens, but there's no sign of that yet.

In the end, I see growth as well, but 60% would be a pleasant shock. I wouldn't bet my band on it.
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1 comment:

Bertrand DeNovo said...

The only way I could see that type of growth is if the US adopts an ISP Levy (where $10 a month is added to your Comcast bill, and all P2P sharing is essentially legalized).

Do you have any thoughts on this type of arrangement?I personally support it.


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