As Music Sales Go Digital …
According to a recent research by eMarketer, physical music spending is down as online and mobile formats gain momentum. eMarketer estimates that online and mobile will grab about 40% of the total music spend in 2009.
As Venture Beat notes:
The most striking fact is the prediction that by 2011, the majority of music sales, 56.5 percent, will be online or mobile, with physical music sales falling by nearly two-thirds from 2006 to 2011. Also worth noting is that by 2011, mobile music sales will draw nearly even in sales to online — $7.3 billion in mobile sales versus $7.5 billion online. Scarier for the music industry as a whole, however, is that total music sales will decline by over $5 billion dollars from 2006 to 2011, with the skyrocketing growth of online and mobile failing to replace to revenue lost to slumping physical sales.
No wonder then that music companies are scrambling for other revenue streams - for instance, a game called Guitar Hero: Aerosmith recently went on sale, with another one with Metallica due soon. In the past, Guitar Hero and Rock Band have featured songs from a wide sampling of artists from the Rolling Stones to Radiohead to Nirvana. Irving Azoff, whose Front Line Management manages Aerosmith and other major artists, says videogame deals can be “much more lucrative than anything you can do in the record business.” Industry executives say bands can receive millions of dollars up front, plus a generous royalty on sales. The band expects to make more money from the game title than it has from any of its dozen-plus studio albums. This does not include the boost the album sales themselves get due to the promotion.
Three of the big for record labels, Warner Music Group, Universal and Sony BMG have already tied up to release their catalog to Nokia. Under the Nokia’s Comes With Music plan, users of Nokia Music Store-compatible handsets get a year’s worth of free downloads. In accordance with the agreement, Nokia would pay the wholesale per-unit rate for downloads over a certain ceiling - believed to be 35 songs per user. You can be sure the labels are going to be wishing that everbody catches the download music bug … and in the process, leave Nokia with a huge liability.
Closer home, India’s first online advertising supported single music release, ‘Ek Kaagaz‘ recently debuted on Faith Records.
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