Digital Top Stories

New report upbeat about digital music future

By | Published on Thursday 30 August 2012


The global digital music market will grow about 15% a year in the next half decade, so that it’s worth $22.5 billion by 2017. So that’s a nice stat to start the day with, isn’t it? Even if it comes with the proviso that most of this growth will take place outside of Europe and North America.

This is the lead stat in a new research report from Informa-owned analyst firm Ovum. It reckons that subscription-based music services, and especially those bundled in with mobile packages, will play the most important role in that growth – and it’s because mobile music revenues could actually fall in the US and Europe, Ovum reckons, that the outlook is less good in those territories.

But in traditionally smaller markets, where piracy may well have hit both CD and conventional download revenues in the past, the bundling of subscription services with mobile packages – something some experts have long said is where the real potential of digital music lies – will lead the digital music boom between now and 2017, Ovum reckons.

The company’s Mark Little told CMU: “In Asia Pacific, growth created by consumers migrating to subscription services such as Lismo Unlimited from KKBOX in Japan will result in a regional CAGR [Compound Annual Growth Rate] of 44%. With Spotify landing in the US, joining Rhapsody, Sony Music Unlimited, Rdio and MOG, such brands are helping reinvigorate on-demand subscriptions, and we estimate a 40% CAGR over the forecast period”.

He added: “We expect the main driver of digital music in the forecast period to be subscriptions, because it is a format that can be easily bundled by service providers, as well as offered directly, resulting in increased penetration of subscriptions around the world”.

Ovum’s upbeat (overall) predictions, follow a report last week by German music association BVMI that said that the digital music market was finally gaining momentum there too. Digital services have been slower to take off in the world’s third largest music market than in many other Western countries, in part because collecting society GEMA has been slow to licence non-download based platforms.

But, according to the new BVMI report, 22.1 million Germans consumed digital music in 2011, and while digital still accounts for less than 17% of recorded music revenues overall in Germany, digital income was up 21.2% last year, as music fans started to embrace the 70 legal download and streaming services now available in the country.

Though, despite the glimmers of hope within, you sense that the report, which was co-published by the German book industry and the German Federation Against Copyright Theft, was really designed to put new pressure of politicians in the country, who have generally been less keen than their counterparts in the UK and France to introduce new measures for combating online piracy (even if the UK measures haven’t really be enacted, and the French measures may well be curtailed later this year).

The survey claimed that 75% of the Germans it polled reckoned it was appropriate to fine people who offer copyright content online without permission, while over 50% endorsed fines for the people who then download content from illegitimate websites.

Frank Briegmann, President of Universal Music Deutschland and a member of the BVMI board, told reporters: “The growth of the digital market is something we are very happy about. It just about compensates for the decline in the physical market. [But] in order to achieve a long term reversal of this trend and to return to positive growth, rigorous action against copyright violators is needed. That is the only way artists will be paid fairly for the use of their work in the future”.