Digital music to grow 15 per cent annually, driven by subscriptions: Ovum

Service provider bundling and shifting consumer mindset to drive growth to near $US22.5 billion in five years

The global digital music market is expected to grow 15 per cent annually, reaching nearly $US22.5 billion by 2017, according to analyst firm, Ovum’s Digital Music Forecast 2012-17.

This is being driven by subscription services, which Ovum predicts to show a compound annual growth rate (CAGR) of 46 per cent. Much of this will be as a result of bundling partnerships with service providers.

“We expect the main driver of digital music in the forecast 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,” Ovum consumer telecommunications analyst, Mark Little, said.

Additionally, Little attributes growth to the shifting consumer mindset, where more consumers are recognising the benefits of subscription model and the extent of access to digital content through such services.

“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 40 per cent CAGR over the forecast period.”

The new forecast also reveals that growth will occur across most regions, besides North America and Europe where mobile music is expected to decline five to seven per cent.

“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 customers,” Little said.

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