Study shows Spotify, streaming catching up

Gartner in a new estimate saw digital music accelerating rapidly but also a possible sea change towards subscription services. It expects the total business to hit $6.3 billion for this year, up nearly seven percent from $5.9 billion in 2010, but for that pace to accelerate as CDs die out and subscriptions grow. It saw an eight percent increase coming in 2012 to $6.8 billion and a 13 percent jump in the longer-term future of 2015.

Subscriptions would more than triple share of the music space in the next four years in this view. While they should make up just over eight percent of the incoming cash from digital music in 2011, the long-run estimate has subscriptions hitting 29 percent, or over $2.2 billion, by 2015.

Much of that transition would come from mobile devices, Gartner suggested. Research VP Mike McGuire said the next fear years were a chance to "reinvent the business" based on Internet-aware devices, such as smartphones and tablets. Much of it would hinge on how easy it was to use these as well as whether labels and services can strike a balance that respects privacy with ease of access and information. Labels and artists might also balk at some streaming services, and artist like Coldplay are holding off on streaming as they often make just a fraction of the revenue on streaming that they do on downloads.

Although Apple made pay-per-track songs popular almost single-handedly through the iTunes Store, subscriptions such as Spotify, Rdio, and Slacker have often been credited for more of the recent momentum, in part because of their mobile support. On-demand streaming can mostly eliminate the need for having local copies of songs and usually gives access to a much larger catalog than the listener could possibly fit.

By Electronista Staff