Streaming to drive global digital music market towards US$22.7bn in sales

29 Aug 2012

The global digital music market is expected to grow 15pc year on year and will be worthy US$22.7bn by 2017, analyst firm Ovum predicts. Subscriptions to streaming services like Spotify and Rdio will contribute largely to this – 46pc growth per year – on the back of bundling deals with ISPs and mobile operators.

Ovum predicts growth across most regions except North America and Europe where mobile music is expected to decline by 5pc and 7pc as ringback tones fail to make up for the decline in ring tones.

“The decline in the growth rate of mobile music from previous forecasts is mainly due to the underperformance of ringback tones, the dominance of free ad-supported music, and data costs that are making over-the-air (OTA) mobile music less appealing to consumers,” Ovum consumer telecoms analyst Mark Little explained.

He said that while mobile music is having a rough ride (particularly in the west), consumers are recognising the benefits of the subscription model, being able to access tens of millions of streamed songs for the price of a CD every month rather than owning individual downloads.

Telcos are helping to drive streaming subscription revenues

Telcos are helping to drive subscription growth with mobile music bundles, leading to significant growth in South & Central America, for example, with over 50pc of compound growth.

“In Asia Pacific, growth created by consumers migrating to subscription services such as Lismo Unlimited from KKBOX in Japan will result in a regional compound annual growth of 44pc.

“With Spotify landing in the US, joining Rhapsody, Sony Music Unlimited, Rdio and MOG, such brands are helping reinvigorate on-demand subscriptions, and we estimate a 40pc CAGR over the forecast period.

“We expect the main driver of digital music in the forecast period to be subscriptions, because it is a format that can be easily bundled by service providers, as well as offered directly, resulting in increased penetration of subscriptions around the world,” Little said.

Music image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years

editorial@siliconrepublic.com