RSSDigital music to make up 41 percent of sales by 2013
By Angela Gunn | Published December 5, 2008, 6:37 PM
CDs are still selling, but a report out yesterday from Jupiter Research says that the long slow decline isn't as slow as previously thought. But what will make up for the drop in shiny-disk sales?
According to the study, digital downloads will fill the void -- but not entirely. The Jupiter survey predicts that overall, the music market will shrink by about 0.8% by 2013, to $9.8 billion in sales, with the percentage of sales of "offline physical format" forms (CDs, albums, etc.) plummeting from a 64% share of sales down to 40%. That's a combined annual growth rate (CAGR) of -8.7% -- a worse number than Jupiter predicted last time they looked at the market (-7.1%).
The percentage of sales accounted for by digital-music formats will reach 41% by 2013, Jupiter says -- the first year, it is thought, where music in digital-file form will outsell those shiny, scratchable formats.
Then as now, downloads from services such as iTunes, Amazon, and their ilk will lead the digital charge -- in fact, downloads will be a bigger deal than even by then, with projected sales of $3.27 billion. That's up from a projected $1.496 billion in 2007, for a very healthy CAGR of 24%. (A note for file sharers: This story isn't about you, though the study does note that 2% of the paid-download buyers they surveyed acknowledged sharing files. Whether you personally would respond truthfully to that question if asked by a pollster, well...)
In contrast, subscription-based models such as those currently used by Rhapsody, Live365, and their competitors will have increased revenue -- about double between then and now, says Jupiter -- but represent only around $508 million in sales. That's a pleasant CAGR of 16%, but proportionally a much smaller piece of the market.
Subscription owners tend to love their tunes, spending more on music per year than downloaders or physical-media folk. So why do their numbers remain, as the survey puts it, "marginal?" The survey suggests that though subscribers spend more, tend more frequently to regard themselves as "music influencers," and love the impulse buys so useful to sales numbers, subscriptions must compete with the appeal of over-the-air downloading to phones and other devices. Upcoming options such as Nokia's "Comes With Music" phone plan are also expected to affect this segment.
Gear makes a difference, and gear (and our perceptions of it) will change. For instance, listening to music on one's mobile phone is more popular among teens then adults (though iPhone users bust the curve on that front, to no one's surprise). The study showed that as the population ages into familiarity with music-capable phones, more will take advantage of that option, eventually flattening ownership for dedicated portable music players at about 41% of the population.
Finally, Jupiter's analysts advise the music industry to stay its current tech-friend course.
"Over the last year, record labels and publishers have shown an increased willingness to work with new digital music models to supplement the loss of revenue from a shrinking market," the study notes, enabling new revenue streams such as advertising and streaming at sites like Lala.com. "Labels and publishers should continue this wise strategy and resolve remaining issues with digital music providers...to develop mutually beneficial terms."
The study is based on a survey of 2,127 individuals polled in June 2008 and selected from NPD Group US' online consumer panel. The survey data are stated by the pollster and Jupiter Research to be an accurate representation of the general US population +/-3%.
Headline should read:
"90 percent of computer savvy people don't pay for music anymore"
Most of what I try to actually buy is not available for purchase, mostly trance and techno. If they don't wanto sell it, I'll get it from the torrents.
Whenever I hear a song I like on XM 82, I look up the artist and song name. They are never available for purchase at Amazon etc... I even check iTunes on my wife's computer.
If they are, I pay for them. I will never buy another actual CD as long as I live however.
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|Mashups too -- trance, techno, and mashups are all unknown territory for Amazon / iTunes / etc. Most frustrating.
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|My heat bleeds for them, it really does.
But then they dont have the huge manufacturing costs, the cost to the environment to support this industry. All of which contributes to the final cost to the consumer.
They need to adapt to the consumer or fail in the current economic climate.
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|Best things to happen in Digital music for me?
Amazon.com MP3 Store
Walmart.com MP3 Store
Both provide approx. 256kbps, unprotected MP3's for under a buck each.
Walmart has their Top 30 for only 74 cents each, which is pretty awesome.
Plus, you can buy a Walmart Gift Card and use that online instead of your credit card if you wish, and that might limit the risk of exposure on your Visa or MC, etc.
I pretty much boycotted music buying for years - like many years - when they started putting DRM on CD's. Specifically, when they had a method that introduced pops and crackles into the audio tracks that were dependent on Oversampling in order to eliminate that noise.
I don't know if any CD drive designed for use in a PC has ever had any oversampling at all, and I think that was what they said they were counting on. If you played it in your home CD player it would error correct/oversample, but if you played it in your CD-ROM drive, it'd pop and crackle.
Well, there was one big issue that they seemed to overlook. Many, many CD players that are in your car also do not have oversampling. So, you pop your new CD into your car stereo and it sounds like garbage.
It was after purchasing some of those types of CD's and being on the tail-end of that crappy audio that I decided to boycott.
Fred Meyer refunded the full price of those CD's and I pretty much stopped buying music.
My MP3 player has recordable FM radio, so I started doing that. Then I'd take the audio file and clip out the songs and change 'em to MP3 files.
I got a DVD-Recorder unit at home and set it to record from MTV and VH1, then did the same thing with that content.
All that was 100% legal for personal use, I believe, and I stubbornly stuck to that for years. ONLY after Amazon.com's MP3 store came online did I actually start purchasing retail music again.
Now Walmart has the same sort of deal. No need for iTunes or some fancy application interface for individual song purchases. You just use your browser, select the singles you want and download them individually.
The songs come pre-tagged, but sadly, do not come with lyrics included in those tags. They do have cover art though.
For me, a guy who had purchased hundreds upon hundreds of CD's over the years (all of which I still own), it felt good to be able to start buying music again. I want to support the artists that I like, and hopefully these purchases will accomplish that.
It's good to be back. :)
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|"...boycotted music buying for years - like many years - when they stated putting DRM on CDs."
I hadn't realized that 2002 was considered such an ancient time in history! Gee! That was all the way back when XP was out! ;-))
Hmmm. DRM was FIRST placed on CDs in 2002 and EMI was the last to do so and stopped in January of 2007.
Now...if ONLY there had been more worthwhile music to be released during that period that has been dominated by hip hop. The quality of music itself has been an issue MUCH longer than DRM has even existed!
;-))
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|Somehow it seemed longer than that.
However, 6 years is quite a long time for me. I used to buy about 80 to 100 CD's per year, a few times even more than 100. So, let's say that because of their lame copy protection thing, they missed out on 500 CD purchases.
Part of the reason that I bought so many CD's is because I had decided to purchase CD versions of my LP's and Tapes.
So hey, for me, that's a lot.
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|You know, there is a fundamental element that is misses in just about all of these 'studies'.
They keep lamenting the decline in sales of CDs.
I have collected music for far too many years and have MANY too many CDs and records (greater than 7500 titles).
But in the last 5 years, while my interest has not waned, the titles I have purchased has dropped precipitously.
Why is that, one MIGHT ask? But few of these erudite studies do! Is is the format that I care about? Well, yeah, to degree, as I have NO interest in volatile highly compressed disposable low-fi MP3s.
But its MUCH more than that! And at the risk of sounding like my mom when growing up, the selection of new titles worth buying has radically declined. Oh sure, a few new acts have emerged, as well as re-mastered or heretofore unavailable legacy recordings been made available, but rap (the music made for and by people who can't play an instrument) and singers who, due to the fact that they cannot hold a sustained note, go off into their quasi-scat that is reminiscent of an untied balloon that one has let loose of as they valiantly and futilely search for a key - ANY key as their vocals are so poor that they cannot hold a sustained note as they try to make the style appear intended...simply put: SUCK.
And combine that with the selection now available in the mass commodity retail outlet that consists primarily of retread K-Tel greatest hits collections modified from the original releases - and the department is a wasteland of plastic just begging to be recycled.
You want to increase sales? Increase the total quality of the music being released. As it is, who cares? Most of my purchases are for legacy material...or for material from additional genres.
The problem with the music industry (aside from the self-entitled pubescents) isn't the format...its the dearth of quality material worth buying.
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|Well said foxfyre :)
I agree, the quality of the music being released has declined a lot this last years..
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|Your an audiophile... Like me - I am a videophile. I collect movies in rare and outdated formats (laserdisc, betamax, etc). Sure I can have 10,000 movies @ 200-700 megs each but its not same has holding the movie in your hand. A old movie on an old format, love it.. lol
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|Yo yo yo, let me grab my crotch. I'm throw'in some money at some b!tchs; see my bling-bling'in teeth?
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|No, but I see a racist fool.
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|Um, foxfyre? Bad news on the sounding-like-your-mom thing :-) .
That said, one does get frustrated when the music that's most heavily promoted isn't the stuff you enjoy -- especially since I'm willing to bet that the stuff you enjoy is still being made. It seems really cruel to me that so many artists get the finger from their labels just as they're getting good; a 50-year-old may not be as fun to watch in videos as a 22-year-old, but if the 50-year-old has stuck with his/her craft, they're almost definitely going to have more to offer. (Not-fun-to-watch comment not valid for guitarists with fine technique. I could watch Thompson play for hours, as long as the camera never moved from his hands. I digress.)
But we're going to have to disagree on hip-hop and R&B. There's crap in both genres, of course, and I'm as tired as you are of singers who confuse pyrotechnics with talent and treat pitch correction like oxygen, but there's fantastic stuff in both genres as well. Ignore the radio and seek the good stuff -- again, digital's your best bet, since streaming, surfing the music blogs, or even taking a flyer on a 99-cent download is a lot less nerve-wracking than dealing with, say, the radio. (And even the radio plays Gnarls Barkley, as good a starting point as any for hearing intelligence in the genre.)
In any case, digital actually gives me at least some hope for more established acts (that aren't the Stones or whatever overfed 60s schmaltz is still unclear on the concept) to find, retain and engage their audiences. You say no one's releasing anything you'd like, but have you looked? I can think of several artists who have Web sites and sell new works from them, or who work with some of the smaller online-only labels to offer their stuff. I've even donated to an artist who decided to fund his next album -- his eighth -- by having interested fans donate what they felt they could early in the process. I did, and now I hear it's ready for release in the next few weeks. I discovered that artist through Audiogalaxy back in the day, and now I'm able to express my support directly -- no music store, no promotion campaign from the label, no radio / video programmer deciding that my interests (and demographic) don't match the marketing plan.
So I understand your frustration, but the material's out there -- as long as you're not wedded tot he shiny-disk experience. Audiophiles will most likely continue to have trouble finding a digital option that meets their needs (have you tried MusicGiant, BTW? if so, did their sound quality work for you?), but we're operating in an era of unprecedented music diversity -- thanks to digital. I'm just glad the record companies might be, at least, figuring out how to get out of the way of discovery and enjoyment.
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