Online Music Finally Goes Mass Market
A new report by media researchers Screen Digest, "Online Music in Europe: Market Assessment and Forecast" predicts that rapidly growing online music sales will start to halt the decline in overall sales of recorded music, but not until 2010.
The total European market for online music will have more than doubled from Euro 121m in 2005 to a forecast Euro 280m by the end of this year. By 2010 consumer spending on online music in Europe will generate more than Euro 1.1bn.
This explosive growth is being driven by rapidly growing broadband penetration and the massive increase in portable music player usage – over 7% of Europeans now use one, up from 2% in 2004 (see table 1 below). By the end of 2005 there were 29m portable music players in Europe and this figure will rise to more than 80m by 2010.
However, the big picture is not so rosy for the overall European music market, which has been in decline – losing 22% of its total value since 2001. Screen Digest predicts the market will continue to fall until 2010, at which point online music sales of more than Euro 1bn / year will begin to offset the decline in physical sales.
Dan Cryan, Screen Digest analyst and author of the report comments: "Online music has been booming. However, online sales alone are not going to be enough to halt the decline in music sales. The music industry needs to make the most of new delivery platforms. We believe with the right strategy - including mobile and online – that the worst might be over by 2010. The industry must adopt a broader approach to selling music, looking beyond the traditional single and album."
The report analyses the causes of declining revenues for the music industry and shows that a wider view must be taken to understand and address the change in consumer behavior. It is easy to point the finger at piracy but data from music industry body IFPI suggests that piracy is declining – the number of tracks available on illegal file sharing networks declined from 1.1bn in 2003 to 885m in 2005. Instead factors like the gradual erosion of music dedicated shelf space in big retailers, like HMV and Virgin, and its replacement with DVDs, books and mobile phones cannot be ignored. Seen in this light the fact that the decline in physical music sales corresponds to the boom in DVD sales begins to look less like a coincidence and more like a cause.
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