But as a new Strategy Analytics report indicates, conventional music media still dominate the North American and Western European markets, and will continue to do so through the end of the decade.
According to Strategy Analytics, overall music revenues in North America will rise from $13 billion in 2005 to $15 billion in 2010, while revenues will rise from $11 million to $14 million in Western Europe during the same period.
The report forecasts that conventional music will still be the standard bearer for the music market in 2010, though some of its share will get eaten away by other forms. In Western Europe, a strong ringtone market will become even larger, while online music will expand greatly and account for $2.1 billion in revenues, equal in size to the ringtone sector. Mobile music will account for just $500 million in revenues.
In North America, conventional music will also remain dominant between 2005 and 2010, though revenues from this channel will decline slightly from $11.4 billion to $11.0 billion. Online music will be the biggest gainer, with revenues more than doubling in the five-year window.
Between the two markets, digital music will account for nearly 30% of music revenues by 2010, compared to 13.9% in 2005, according to Strategy Analytics.
Of course, one factor to keep in mind is that online music revenues do not tell the full story, since a significant volume of free (legal or illegal) digital music is floating around the Internet. Although illicit music downloading has declined and pay service use has increased, The Yankee Group finds that almost 40% of US online households still use illegal P2P sites to acquire music. It remains a significant problem for the music industry.
For more on these issues, read eMarketer's Digital Rights Management report.