Since subscribing to Napster, I've not bought myself a single CD, preferring to buy digital copies. And it seems that I'm not alone.
Less than a year after iTunes and Napster launched their UK offerings, legal digital music downloads are close to outnumbering physical CD sales here:
"There were 383,000 single track downloads sold last week compared with 393,000 physical singles."
- British Phonographic Industry press release dated 18 April 2005.
This is astounding. A distribution channel that's decades old will soon be overtaken by one that's just over one year old.
The change is so massive that it has forced the British Phonographic Industry to include digital download figures in the British single charts.
This, and the exploding online music sales figures, will pressure independent labels to license their tracks to iTunes, Napster and OD2, ensuring you can access even more tunes online. When Napster launched in the UK, it had 500,000 tracks. It now has over a million.
As use of digital music download services moves beyond twenty-something early-adopters to mainstream Internet users, the demand for back-catalog tracks will continue to grow, as will the commercial viability of making less popular tracks available online.
The growth of music subscription model and the commoditization of the download market will result in static or falling average revenue per user. Initially the growth in subscriber numbers will more than offset this. But as that growth slows we'll see sophisticated attempts by the major record companies and major music stores to up-sell and cross-sell to people who like a given band, or musical genre. Want tickets to see them in concert? Click here. Want to buy the T-Shirt? Their second Album? A video-on-demand stream of one of their concerts? Here's 30% off a similar-sounding band we think you'll like, based on your past purchases, and our data-mining efforts.
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