"Forecast: The Evolution of the Digital Music Industry" is a free Midem sponsored research report from GigaOM Pro. David Card authored it with a focus on digital music sales and subscriptions; and discussion of Apple, as digital music incumbent, along with Spotify, Pandora, MOG, Rhapsody and Facebook as best-positioned for benefiting from disruption.
The report can be downloaded from GigaOM Pro for free. ( While we're on the subject of disruptive approachs, GigaOM Pro is an excellent example of disrupting industry research with a more affordable subscription model.)
Card considers the digital music market through use of "disruption vectors: the areas where large market shifts are occurring and where companies will position themselves to gain share and increase revenues."
Card defines the key disruption vectors as:
- Anywhere access
- Discovery
- Rent/buy
- Subsidization
- Listening
- The role of labels
And he predicts:
"As digital music services go mobile and into cars, the most important disruption vector in digital music will be anywhere access. Other critical disruption vendors include social-media-based discovery and two business models, paying for access instead of ownership and subsidization."
"These vectors will take some time to play out, but the overall industry should finally return to growth within the five-year forecast horizon, as digital music spending, driven by subscriptions, will average double-digit yearly growth to total $4.1 billion in 2015. Top disruptive companies to watch include Spotify, Pandora, MOG, Rhapsody and Facebook: They are the ones best-positioned to take advantage of the disruption vectors."
Cards notes that unexpected moves from Apple are always a possibility and including Facebook is a reminder that they stand to benefit from all sorts of disruptive change as all media becomes more social.
Some key takeaways:
"The most important disruption vector is anywhere access. A large portion of U.S. music listening happens in the car, and even before digital services are integrated directly into auto audio systems, ubiquitous smartphones will plug in."
"The net result [of rising sales of digital downloads and increasing revenue via subscription services] is that digital music will increase from 41 percent of consumer spending on recorded music to 65 percent in 2015 and will finally start the industry on a growth path again."
The report seems solid enough and I have no serious criticisms. I might be a bit more opinionated if I didn't think issues related to major corporate approaches to digital music sales and streaming are possibly the least interesting aspect of current changes in the music industry as a whole.
Even though the shift to digital music is a key element in current changes, the more interesting responses to industry disruption are being exhibited by indie artists and labels, web/mobile companies that are offering services for indie artists and labels, web/mobile companies that are creating digital spaces for artists and fans to connect and firms reinventing offline possibilities.
Nevertheless, if you're interested in the future of streaming and subscription-based music services then Forecast: The Evolution of the Digital Music Industry is well worth a read.
Hypebot Features Writer Clyde Smith maintains his freelance writing hub at Flux Research and music industry resources at Music Biz Blogs. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.
