Thursday, February 28, 2008

Forrester: Digital Music To Surpass CD Sales By 2012

Forrester: Digital Music To Surpass CD Sales By 2012

Cambridge, Mass., February 19, 2008 . . . Half of all music sold in the US will be digital in 2011 and sales of digitally downloaded music will surpass physical CD sales in 2012, according to a new report by Forrester Research, Inc. (Nasdaq: FORR). Digital music sales will grow at a compound annual growth rate of 23 percent over the next five years, reaching $4.8 billion in revenue by 2012, but will fail to make up for the continuing steady decline in CD sales. In 2012, CD sales will be reduced to just $3.8 billion.
"This is the end of the music industry as we know it," said Forrester Research Vice President and Principal Analyst James L. McQuivey. "Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio."
The Forrester report is based in part on a survey of more than 5,000 consumers in the US and Canada. Among the drivers of Forrester's five-year forecast for music sales:
MP3 player adoption. The average MP3 player is only 57 percent full, suggesting that the devices are underutilized, while more of the devices are being bought by households with more than one MP3 player. Moving forward, a majority of MP3 players will be sold to households that already have one. DRM-free music. With the four big music labels now committed to eliminating digital rights management (DRM), DRM-free music will extend beyond pioneer to Apple iTunes and the other major online music sites. Social networks. DRM-free music enables every profile page on or Facebook to immediately become a music store where friends sell friends their favorite tracks. Forrester believes digital downloads are the logistical mass market for the future, satisfying all the needs that people have when it comes to music — easy to find, easy to buy, and easy to listen to, regardless of the device. On the other hand, subscription music services will show modest growth, reaching just $459 million in revenue in 2012 according to Forrester's projections, while experiments in ad-supported downloads will be silenced by the powerful combination of DRM-free music and on-demand music streaming on sites like
"The industry has to redefine what its product is," said McQuivey. "Music executives have spent years tracking CD sales. But the artist is the product — not just the source of it. New forms of revenue will come from unexpected sources. For example, the industry has failed to capitalize on the growing popularity of video games such as Guitar Hero and Rock Band. In a market where musicians are happy to sell a million copies of a CD, a video game market where titles can sell five million copies is enough to motivate even the most depressed music executive."
"The End Of The Music Industry As We Know It" is currently available to Forrester RoleView™ clients and can also be purchased directly at

About Forrester Research
Forrester Research, Inc. (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 24 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs. For more information, visit
Tracy SullivanSenior Public Relations SpecialistForrester Research, Inc.+1

Monday, February 25, 2008

Global Online Music Sales to Total US$8.9 Billion By 2010, According to a New Report by Global Industry Analysts, Inc.

Global Online Music Sales to Total US$8.9 Billion By 2010, According to a New Report by Global Industry Analysts, Inc.

The growing popularity, deployment and acceptance of digital music continues to contribute to the substantial growth in the online music industry. The epic dimensions of worldwide digital music industry continue to evolve as the highly touted 3G mobile phones, portable digital music players and broadband Internet finally see the light of day, throwing up opportunities for further growth in the market.

San Jose, California -February 25, 2008 -- As Internet gains popularity, a new strain of market forces emerged to shape growth and success in the now altered marketplace. In this regard, technology, and business models are being transformed, and developed to complement, and foster the take up of new services. The swift and enthusiastic uptake of downloading music directly onto mobile phone or PC has provided a cushion against ebbing revenues in retail music industry worldwide. The worldwide Online Music market is expected to witness rapid growth over the review period to reach US$8.9 billion in sales by 2010. The extent of growth in the worldwide online music industry can be gauzed from the fact that downloaded music revenues exceeded online sales of physical media during 2006. The widespread availability of legal web sites is a major factor contributing to the increased sales in this industry. The advent of new and sophisticated technologies and devices such as portable digital devices are expected to bolster sales in the online music industry. Growing penetration of Internet services and broadband among household consumers is also expected to push up the revenue generation capabilities of the online music industry.

Despite the strong growth, the online music industry faces challenges in the form of illegal file swapping services, price erosion due to intense competition and infrastructure hurdles. Uncontrolled growth of digital industry poses several challenges for the music industry. Extensive violation of copyright, poor interoperability of devices and files, and digital stream ripping are some problems faced in the online music industry.

Online Music: A Global Strategic Business Report The worldwide music industry was dominated by the presence of large labels such as Warners, Universal, EMI and Sony BMG, which captured a large chuck of the overall industry sales. However, the advent of Internet and online music has transformed the scenario, thereby contributing to proliferation of diverse worldwide music. Greater accessibility through Internet allowed independent and foreign artists to come close and compete with well-established music brands. The online music industry is currently witnessing increased consolidation activity, as existing players seek to fortify their presence through acquisitions, mergers or strategic collaborations. To deal with the intense competition, market participants are forging marketing alliances across diverse sectors.

The US dominates the global online music industry, which can be attributed to high levels of Internet penetration and availability of advanced digital technologies and devices. Adoption of broadband services and digitization of music with introduction of portable digital music players, represent two of the industry's major push factors. The US generated about US$2.7 billion in sales for 2007, as stated by Global Industry Analysts, Inc. Asia-Pacific is, however, expected to drive future growth in the global market, increasing at a compounded annual growth rate of 48% over the forecast period. In the United States, hard format segment is projected to dominate the market, capturing over 44% share of the sales by 2010. The European online music market witnessed a major turnaround in 2006 as the consumer spending increased by more than 100% during the year. Though piracy is the prime factor for ebbing retail music sales, replacement of shelf space dedicated for music with DVDs, games, mobile phones and books in major retailers also had a significant impact. one-off downloads segment dominates sales in the Asia-Pacific region reaching US$533 million in 2007.

The report titled "Online Music: A Global Strategic Business Report" published by Global Industry Analysts, Inc., offers a comprehensive analysis of the industry structure, market drivers, issues, trends and competition. The study analyzes recent past, current and future market data and analytics over the period 2004-2010 and long term projections (2011-2015) for regions such as the United States, Canada, Japan, Europe, Asia-Pacific and Rest of World.

The report reviews key players in the global and regional online music participants including Buongiorno Vitaminic SpA, Inc., iTunes, RealNetworks, Inc., Musicmatch, MusicNet, Inc., MTV Networks, OD2, Napster, Ecast, Inc. and Yahoo! Music Unlimited.

For more details about this research report, please

About Global Industry Analysts, Inc.Global Industry Analysts, Inc., (GIA) is a reputed publisher of off-the-shelf market research. Founded in 1987, the company is globally recognized as one of the world's largest market research publishers. The company employs over 700 people worldwide and publishes more than 880 full-scale research reports each year. Additionally, the company also offers a range of over 60,000 smaller research products including company reports, market trend reports, and industry reports encompassing all major industries worldwide.

Global Industry Analysts, Inc.Telephone 408-528-9966Fax 408-528-9977 Email press@StrategyR.comWeb Site