Boston Business Journal published a new report by Forrester Research Inc. that shows that half of all music sold in the U.S. will be digital in 2011 and sales of digitally downloaded music will surpass physical CD sales in 2012.
The report also claims that digital music sales will grow at a compound annual growth rate of 23 percent over the next five years, reaching $4.8 billion in revenue by 2012. In contrast, by 2012, CD sales will be reduced to $3.8 billion.
“This is the end of the music industry as we know it,” said James McQuivey, vice president and principal analyst at Forrester Research, in a statement. “Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio.”
McQuivey, a former professor at Boston University, tells record executives to cheer up because there are ways to rise from the ashes. He says first, the industry should quit fooling around with music subscriptions and ad-supported models. People want to own their music and downloads have won. Only 7 percent of adults on the Web say they have ever tried a subscription service, according to the report.
In a final note, McQuivey suggests that music artists, who have historically looked down their noses at advertising, had better change. He says the industry should rip a page out of NASCAR’s playbook.
“Artists who used to pretend that their platinum album success was really about their “art” will no longer have that luxurious pretense because labels won’t sign them unless they agree to a barrage of sponsorship opportunities,” McQuivey wrote. “There will eventually come a day when Chips Ahoy will contend with the Keebler Elves over who can be the official cookie of the Taylor Swift world tour.”