Digital music revenues to soar but that's not as good as it sounds: Ovum

Digital music revenues to soar but that's not as good as it sounds: Ovum

Compound annual growth rate of 22 per cent predicted for Australia

Global digital music revenues will hit more than $US20 billion by 2015. Of this 35 per cent will come from Asia-Pacific ($US7 billion), driven by strong growth in subscription services, according to the latest forecast from independent telecoms analyst, Ovum.

However, while this is a compound annual growth rate (CAGR) of more than 28 per cent from 2010 to 2015 in Asia-Pacific, Ovum has found that the music industry is not maximising digital music revenues mainly because of the amount of free music available online.

Ovum analyst, Mark Little, said: “Digital music will experience what might appear to be healthy growth over the next five years, but there is a danger that this could mask the fact that the industry is not maximising revenue potential”.

“There is too much free music available in the digital economy and not just the illegal kind. 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’s forecast predicts that Asia-Pacific revenues from music subscription services will grow at a CAGR of more than 40 per cent from 2011 to 2015, as consumers recognise the benefits of being able to access millions of streamed songs for the price of a CD every month rather than owning individual downloads.

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. Meanwhile, Sony launched Music Unlimited powered by Qriosity in February.

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 per cent in 2010 in the US – a trend expected to cross the channel before long.

Ovum predicts a 22 per cent CAGR for Australia from 2011 to 2015. Figures for other APAC countries are: China 56 per cent (%), Hong Kong 14%, India 56%, Indonesia 22%, Japan 11%, South Korea 11%, Malaysia 14%, New Zealand 12%, Philippines 28%, Singapore 14%, Taiwan 15%, Thailand 17%.

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Tags GoogleApplesonyovumPandoraSpotifyGroovesharkfreemiumcompound annual growth rate (CAGR)Music Unlimited powered by Qriositydigital music industry


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