Some Good, Mostly Bad News Says Jupiter Research
November 26, 2007 at 5:42 AM (PT)
The good news: Digital music sales are surging, they're expected to hit $1.3 billion in 2007 and will account for some 34% of total music industry sales by 2012, up from 9% in 2006, writes REUTERS. The bad news: The rise in digital sales is not expected to compensate for the continued decline in CD sales. In other words, the pie is shrinking.
"Nor will they return the overall industry to growth. But digital’s where the growth is," says JUPITER RESEARCH’s DAVID CARD in his latest study. "It’s tough making money, except if you’re making iPods. Then you’re making a lot of money." That means artists and their music companies will have to scramble to come up with fresh revenue streams.
"The key message is that if you’re in the music business, particularly the record business, you have to be in different businesses," he said, noting that potential new revenue could come from licensing music to advertisements, TV shows and video games.
Contrary to popular belief, touring is only marginally profitable for many acts, he said. "A lot of casual observers would say recording music is just an ad for touring. Madonna and others make a lot of money out of touring, but most other bands don’t."