|
|
 |
|
|
|
Report: Global Music Spending Will Fall While Digital Grows
NEW YORK -- June 18, 2008: The newest edition of PricewaterhouseCoopers' "Global Entertainment and Media Outlook" report on the recorded-music market says recorded music -- including all physical formats and digital distribution -- will continue to fall worldwide, amounting to $32.5 billion in 2012, down from $33.4 billion in 2007.
But within that, digital music distribution -- including legal downloads, music delivered wirelessly to mobile phones and other devices, and all types of ringtones and ringback tones -- will grow rapidly, to $18.8 billion in 2012 from $7.3 billion last year.
By region, PWC expects Asia to be the first region where digital sales will pass physical, in 2009. The same will happen in Latin America in 2010, the report predicts, and in the U.S. and Canada in 2011 -- the same year digital will overtake physical music distribution on the worldwide level.
Looking at the U.S., PWC says the availability of unprotected digital music will boost Internet distribution, and that new 3G handsets and upgraded wireless networks will help fuel the market for music on mobile phones -- and says this migration to digital distribution will result in "steep declines in physical distribution" for music, which will drop from an $8 billion market in 2007 to $2.9 billion in 2012.
Digital, meanwhile, will rise to $5 billion in 2012 from $2.3 billion last year, with legal downloads becoming a $3.7 billion business by 2012, up from $1.5 billion. Music distributed to phones will be at $1.3 billion in 2012, the report predicts, up from $879 million in '07.
The report notes that legal downloads are now the fastest-growing component of the recorded-music market in the U.S., with revenue rising 34.5 percent, to $1.5 billion, in 2007. Single-track downloads are will the largest component of that market, at $802 million in '07, but album sales are rising fast, up by 54 percent last year.
The report looks briefly at ad-supported downloads, such as SpiralFrog and the limited-catalog service Qtrax, but says, "It is not yet clear that there is a market for ad-supported music, particularly as the paid market is becoming much more flexible due to the elimination of copy protection software."
PWC is projecting that single-track legal downloads will be a $2.2 billion business by 2012, with 1.9 billion tracks sold. The report notes, "The profit margins for Internet distributors such as iTunes are comparatively low -- at about 5 to 10 percent of the selling price -- and are being squeezed as costs rise. As the market becomes established, we expect distributors will be able to raise prices without encountering much resistance." PWC projects that single-track downloads will cost $1.15 in 2012.
Music on mobile phones, meanwhile, is projected to be a $1.3 billion market in the U.S. by 2012, even as the average price of a song from a wireless carrier falls to $2.20 by 2012, down from an average of $2.43 in 2007.
The mobile-download market has slowed, the report notes, as the economic woes have cut into the growth of mobile overall, but PWC projects that growth will be back in the double digits by 2010. In 2012, it predicts, there will be 580 million mobile downloads sold, up from 361 million in 2007.
Though PWC is projecting that physical music sales will continue to fall, it notes that CDs still have sound quality superior to compressed digital music and is best suited for play on sound systems. "For these reasons," the report says, "we do not expect the physical music market to disappear." But album unit sales will fall from 513 million in 2007 to 210 million in 2012, PWC projects, and overall physical unit sales, including videos and singles, will be at 232 million in 2012, down from 544 million last year.
Comment on this story
E-mail this story to a friend
Sign up for Radio Headlines
|
|
|
|
|
|
|
From the Publisher
|
|
|
