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Thursday, January 20, 2005

Digital Music:Threat Becomes An Opportunity

IFPI Digital Music Report 2005,is a comprehensive review of the music industry's digital strategies and of the fast-emerging market for online and mobile music distribution. IFPI has more than 1,450 member record companies across the world. Excerpts with edits and my comments added:

• Legal music sites quadrupled to over 230 in 2004
• Available music catalogue has doubled in 12 months to 1 million songs
• Paid-for downloads up more than tenfold to over 200 million
• Consumer attitudes more favourable to buying music online

Music on the internet and mobile phones is moving into the mainstream of consumer life, with legal download sites spreading internationally, more users buying songs in digital format and record companies achieving their first significant revenues from online sales. Music fans downloaded well over 200 million tracks in 2004 in the US and Europe - up from about 20 million in 2003. This helped bring record companies their first year of significant revenues from digital sales, running into several hundred million dollars. Analyst Jupiter estimates that the digital music market was worth US$330 million in 2004, and is expecting it to double in value in 2005. The supply of music available digitally is proliferating. The number of online sites where consumers can buy music legally has now hit more than 230, up from 50 a year ago, with record companies licensing the bulk of their active catalogue for download, totalling over one million songs - more than doubling the amount of available repertoire within one year. Services like iTunes and Napster have become household names internationally, and many other national sites are specialising in local repertoire.
Portable players, led by the hugely successful iPod, and mobile phones, are helping transform the consumer experience of enjoying music and creating new revenue opportunities. There are estimates that 50% of mobile content revenues will be from music. It indicates that consumer attitudes to digital music are changing, with a new survey in six European countries (Denmark, France, Germany, Italy, Austria, UK) showing that nearly one in three music downloaders intend to buy from legal music services in the coming months (31% compared to 22% currently).
In twelve months' time the digital music market will have grown very significantly around the world. A sector that now accounts for a very small percentage of the industry's revenues is poised for take-off in the next few years. At long last “the threat has become the opportunity."
"The record industry's priority now is to licence music - to as many services, for as many consumers, on as many formats and devices for use in as many places and countries as it can. The straightforward conditions are that the business must be legitimate, the music must be correctly licensed, and record companies and other rights holders must get properly paid."

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