Music feels the benefit of bundling as Ovum predicts subscriptions to drive 15% growth in digital
The global digital music market is expected to grow at 15 percent annually, reaching nearly USD$22.5 billion by 2017, according to global analyst firm, Ovum. Revenue is being boosted by subscription services, predicted to show a strong compound annual growth rate (CAGR) of 46 percent, much of it on the back of bundling partnerships with service providers.
New forecasts* from the global analyst firm reveal growth across most regions, except North America and Europe, where mobile music is expected to decline by 5 â€“ 7 percent (excluding unlicensed, non-music, and mobile subscriptions) as ring back tones fail to make up for the decline in ringtones.
Mark Little, Ovumâ€™s consumer telecoms analyst, explains: â€śThe decline in the growth rate of mobile music from previous forecasts is mainly due to the underperformance of ringback tones, the dominance of free ad-supported music, and data costs that are making over-the-air (OTA) mobile music less appealing to consumers.â€ť
While mobile music is having a rough ride (particularly in the west), consumers are recognising the benefits of the subscription model, being able to access tens of millions of streamed songs for the price of a CD every month rather than owning individual downloads. Telcos are helping to drive subscription growth with mobile music bundles, leading to significant growth in South & Central America, for example, with over 50 percent CAGR.
Little foresees, â€śIn Asia Pacific, growth created by consumers migrating to subscription services such as Lismo Unlimited from KKBOX in Japan will result in a regional CAGR of 44 percent. With Spotify landing in the US, joining Rhapsody, Sony Music Unlimited, Rdio and MOG, such brands are helping reinvigorate on-demand subscriptions, and we estimate a 40 percent CAGR over the forecast period.â€ś
Little concluded: â€śWe expect the main driver of digital music in the forecast period to be subscriptions, because it is a format that can be easily bundled by service providers, as well as offered directly, resulting in increased penetration of subscriptions around the worldâ€ť.
NOTES TO EDITORS
* Digital Music Forecast 2012â€“17
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