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The shrinking music dollar to be stretched by subscriptions


The shrinking music dollar to be stretched by subscriptions


Music isn’t going anywhere, people will always want it in their lives. But making big money off recorded music is pretty hard right now. The way consumers use music is changing too, and with the declining popularity of physical products like CDs, the importance of actually owning a song is also diminishing. Consumers are becoming more comfortable with renting music through subscription services.

Ovum predicts that Asia-Pacific revenues from music subscription services will grow at a compound annual growth rate (CAGR) of more than 40 per cent from 2011 to 2015, as consumers move from seeing music as something you choose and buy individually, to preferring to access millions of streamed songs for a low price. Subscription growth will also be driven by technology giants Apple and Google, as well as Spotify, which are all expected to launch digital music subscription services this year. Sony launched ”Music Unlimited powered by Qriosity” in February.

Ovum says the combined effect of an increased share taken by music subscription services and the large amount of free music available is slowing growth in paid online music downloads, down to just 3% in 2010 in the US.

Challenge to subscription services will come from popular free access internet radio stations like Pandora and Grooveshark.

“There is too much free music available in the digital economy and not just the illegal kind,” says Ovum analyst Mark Little. “Free Internet radio such as Pandora or Grooveshark, and freemium on-demand music services such as Spotify, are offering free music without maximising advertising or premium subscription revenues for themselves or the industry.”

Ovum forecasts global digital music revenues will hit more than $20bn by 2015, out of which 35% are derived from Asia-Pacific.

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