Online music sales are unlikely to drive a revival in the music industry and revenues will continue to fall for the time being, according to a study by Informa Media Group.
The report, entitled
The Global Music Industry, claims that the value of global music sales will drop for the fourth year in a row to £16.5 billion this year and an even bigger fall is envisaged in 2004.
A number of factors have been blamed for the decline in music sales, notably CD piracy and online file sharing (see Music Industry Must Embrace The Net, Says Study) but there is a belief that the trend can be reversed. The onus seems to be on record companies to deter copying and develop legitimate digital services (see Unknown Downloaders Threaten Online Music Ambitions).
“The music industry is in a bad way at the moment but the continued fall in the value of music sales is certainly not irreversible,” said Simon Dyson, the author of the report. “The success of the new download services proves there is a viable market for legitimate digital sales, but the music companies must act decisively to stop the growth of the illegal services and the widespread copying of CDs.”
The study suggests that the music industry will begin to pick up in 2005 with revenues reaching $32 billion in 2008. The online sector is starting to burgeon (see Online Music Market Growing Slowly) but Dyson warns against an overreliance on download services. He estimates that in five years time, only 5.7% of all music sales will consist of digital sales with online sales accounting for 12% of the total.
One development that will have ramifications is the acquisition of Warner Music, one of the world’s leading record labels, by Edgar Bronfman Jr. The media magnate today paid $2.6 billion for the company which was also being courted by EMI. Two other major players, Sony and Bertelsmann’s BMG, are awaiting regulatory approval before the planned merger of their music units.
