In just four years time, the digital music industry will achieve $20 billion in global revenue. That’s according to a new report by research firm Ovum. The report suggests that subscription music services will be instrumental (pun not intended) in driving revenue up 60 percent by 2015. Both Google and Apple are expected to launch cloud-based music subscription services sometime this year.
Mark Little, Ovum’s research analyst who authored the report, says that even though the figure bodes well for the digital music industry as a whole, there’s also indications that there’s even more money to be made — if something could be done about all the free music out there.
“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,” Little said to New Media Age.
“There’s too much free music available, 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 music without maximising advertising or premium subscription revenues for themselves or the industry,” Little continued.
Basically, all the free music — especially free and on-demand music — available online is no longer pushing consumers to buy digital albums as they once did. ITunes, which controls the majority share of the digital music market, saw its revenue dip just last year.
Little may have a point arguing that all the free music services are cutting into potential profits, but he’s not likely to find many sympathetic music fans out there. For example, if you want to hear a particular song you can more than likely find it, play it and add it to a playlist on Grooveshark. Grooveshark also allows streaming through mobile devices for a monthly subscription fee of $9 (not available through Apple’s App Store, but check Cydia). Pandora offers free, ad-supported music streaming online and through its mobile app.
Even so, music fans and the music industry should both be happy with a report that suggests profitability coexisting with a measure of free options. No need to get greedy and rehash the ugliness of the file sharing sagas of the last decade.