Forrester Report: Digital Music Download Sales to Pass CD Sales by 2012 but CD Sales drop dead (Digital Media Wire)

Nice to hear this stuff from Forrester: Report: Digital Music Download Sales to Pass CD Sales by 2012 | Digital Media Wire.

"Despite the rise, digital will still not compensate for falling CD sales, which will drop off to just $3.8 billion in 2012. "This is the end of the music industry as we know it," said Forrester principal analyst James L. McQuivey...."

"The firm also noted that "experiments in ad-supported downloads will be silenced by the powerful combination of DRM-free music and on-demand music streaming on sites like imeem.com."

“The industry has to redefine what its product is,” said McQuivey. “Music executives have spent years tracking CD sales. But the artist is the product - not just the source of it. New forms of revenue will come from unexpected sources. For example, the industry has failed to capitalize on the growing popularity of video games such as Guitar Hero and Rock Band. In a market where musicians are happy to sell a million copies of a CD, a video game market where titles  can sell five million copies is enough to motivate even the most depressed music executive.”

Indeed but I don't agree on the impact of these trends on ad-supported music models: after all, the likes of last.fm and imeem (and soon, myspace, and many others) will depend very heavily on ad supported revenue streams. The Future of Music is in ACCESS, first, and only then in PRODUCTS. Metered, flat-rated access, with 100s of upstream-selling options on top. And with ads2.0 creating new pools of money. See this marvelous illustration, below...

Among the drivers of Forrester’s five-year forecast for music sales:

    * MP3 player adoption. The average MP3 player is only 57 percent full, suggesting that the devices are underutilized, while more of the devices are being bought by households with more than one MP3 player. Moving forward, a majority of MP3 players will be sold to households that already have one.
    * DRM-free music. With the four big music labels now committed to eliminating digital rights management (DRM), DRM-free music will extend beyond pioneer Amazon.com to Apple iTunes and the other major online music sites.
    * Social networks. DRM-free music enables every profile page on MySpace.com or Facebook to immediately become a music store where friends sell friends their favorite tracks.

Video comment: making money around the music

Comments

[Thomas]

I agree. The report seems to miss the biggest point, the developement of subscription services, "feel like free", and ad supported services, and overrated a "trend" like video games. Video games are like the movie soundtracks a good revenue source but the won`t change the game. Pay per downloads won't be as important than the report says.