Future of Music Consumption

One day, some generations from now, business students will look back on the music industry and how it fundamentally altered between the late 1990s through to 2010. It will almost certainly be a case study in how external factors – the internet – can fundamentally alter your business and turn its entire model up on its head.

It will also undoubtedly be a case study on how influential the internet has become to modern society, at a consumer level and enterprise. Having said that, we think this often sharp cocktail of music plus the web shows how folks will soon consume music.

Streaming music is unavoidable

The sharp rise to fame and mass market notoriety for streaming music services like Spotify, Rdio, Rhapsody and Pandora in 2010 is proof that these businesses will be viable, and are the next step in the evolution of music. You will no longer purchase music, but will rather stream it for either a flat monthly fee or on an ad subsidised model. Furthermore the primary consumption device will shift from mp3 players like the iPod, which dominated throughout the early 2000’s, to modern smartphones.

Digital download will remain

However, in the face of streaming music services, we do not believe there will be a sharp decline in the amount of digital downloads sold. Sure, this curve will eventually flatten out, but there will always be people who want to ‘own’ their music in addition to (or in lieu of) merely streaming the content. iTunes, which perfected this model for music distribution, will likely continue to be the big player in this space.

Physical media sales will keep shrinking

Finally, just like there will be those who prefer to download tracks in lieu of using streaming music services, there will always be an audience for CDs. The problem is, as broadband penetration increases around the world and more and more people get online, the decline of the CD business will only accelerate.

What’s really sad about this is that record labels still hold onto this business with both hands – since there is still much money to be made here – at the expensive of digital downloads and streaming music services. The issue will only come to a log for these execs when CD sales are dramatically eclipsed by digital downloads and streaming music.

The democratization of music

All of this will result in the democratization of music, where power is returned to the listeners and content creators, from the executives who once made all the big bucks. What’s more, a new crop of web savvy entrepreneurs will also muscle their way into this business as they mull over how to build even more disruptive software.

Posted via email from Music Business Information