The Future of the Digital Music Industry

By Tracey E. Schelmetic March 07, 2011

How big is the digital music industry? The bigger question is: how big is the digital music industry going to become?

According to research group Ovum,the digital music industry will achieve $20 billion in global revenue by 2015. The report suggests that it will be subscription-based music services – launched by the usual suspects – that will help drive up revenue by 60 percent in four years. Both Google and Apple are expected to launch cloud-based music subscription services sometime this year, reported Digital Trends, in services similar to Europe's Spotify.

Ovum's Mark Little says that even though the figure bodes well for the digital music industry as a whole, there’s also indications that there’s even more money to be made, if something could be done about all the free music out there. “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 maximizing revenue potential,” Little told New Media Age.

“There’s too much free music available, 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 music without maximizing advertising or premium subscription revenues for themselves or the industry,” said Little.

Basically, all the free music — especially free and on-demand music — available online is no longer pushing consumers to buy digital albums as they once did. iTunes, which controls the majority share of the digital music market, saw its revenue dip just last year.

Little may have a point arguing that all the free music services are cutting into potential profits, but he’s not likely to find many sympathetic music fans out there. For example, if you want to hear a particular song you can more than likely find it, play it and add it to a playlist on Grooveshark. Grooveshark, an online music search engine and music streaming service, allows streaming through mobile devices for a monthly subscription fee of $9. Pandora offers free, ad-supported music streaming online and through its mobile app.

Even so, music fans and the music industry should both be happy with a report that suggests profitability coexisting with a measure of free options. No need to get greedy and rehash the ugliness of the file sharing sagas of the last decade, notes Digital Trends.

Tracey Schelmetic is a contributing editor for TechZone360. To read more of Tracey's articles, please visit her columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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