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Digital Music Market to Reach $14.9 Billion by 2010.

Category: Multimedia

by Anton Shilov

[ 11/24/2006 | 04:01 PM ]

A research firm said this week that the market of digital music would grow six times in several years and would reach $14.9 billion by 2010. Sales of digital music will account for over one third or record companies’ revenues by that time, it was said, whereas sales of music on physical media is set to decline.

Due to the rapid growth of mobile and broadband music services, iSuppli analyst firm believes that worldwide market for digital recorded music will reach $14.9 billion in revenue by 2010, expanding at a compound annual growth rate (CAGR) of 40.7% from $2.7 billion in 2005. Meanwhile, the market for physically distributed music will decline to $19.6 billion by 2010, down from $27.3 billion in 2005.

Digital music in 2006 represented 12% of all revenue posted by record labels. iSuppli predicts this will grow to 40% of the overall record label revenue by 2010. With nearly $33 billion in total recorded retail music revenue accumulated in 2005, this is an enormous opportunity for those involved in mobile and broadband distribution across the supply chain, the company noted.

Worldwide Recorded Music Revenue Forecast, by Digital and Physical Distribution

With CD sales under assault, digital distribution represents a major transformation of the whole music industry. Music record labels, principal players in a digital distribution value chain, at present have to take into account that the chain now also includes broadband digital music stores like iTunes, mobile network operators, MP3 player and mobile-phone manufacturers, music distributors, platform software companies and other technology providers.

Given that Apple’s success on the market of both players and music was a result of a creation of an easy-to-use platform that includes a decent iPod device and a well-made iTunes store, iSuppli said that more companies are expected to mimic the vertically integrated model.