British consumers will spend up to £160 million on digital downloads this year, which is up about 50% on last year. I know this because ERA Digital, the new digital bit of the Entertainment Retailers Association, has just said so. Although single track downloads remain popular and will account for well over half that figure, ERA reckon the growth in full album downloads that will have an especially important role in generating those record digital revenues. The arrival of high profile new download stores like those being planned by Play.com and Amazon, all of which are sure to be accompanied by considerable marketing spend, will also aid the legit download boom.
ERA Digital chairman Russel Coultart told reporters yesterday: "The big question is the extent to which new players in the market will drive overall market size. It is certainly the case that 2008 will see a lot more marketing activity to the consumer. If all goes as expected, the total market could easily exceed £160 million, up 50% on 2007".
The overall Director General of ERA, Kim Bayley, was generally upbeat about 2008, predicting that record digital sales would be accompanied by good physical product sales on the high street - in music CDs as well as other entertainment products: "Games and DVD continue to be the star performers for entertainment retailers, but our members are optimistic that a stronger product line-up from record companies in 2008 will produce good news for music sales".
Elsewhere, a new report from Forrester Research predicts that digital music sales will surpass CD sales within five years. Following a survey of 5000 customers in the US and Canada, the Forrester study has predicted that digital sales will grow on average 23% each year meaning annual download sales by 2012 will be $4.8 billion. CD sales will continue to decline, meanwhile, so that by 2012 they generate $3.8 billion.
Despite ERA's optimistic outlook for music sales in the UK this year, Forrester reckons that on a global level digital growth won't fully compensate for the decline in physical release sales, even by 2012, meaning overall the record industry will be worse off, despite the digital boom.
Other interesting stats and predictions from the Forrester survey include the following...
- The average consumer only uses just over half of the capacity of their MP3 player - suggesting those ever increasing memory sizes on digital music players are not really required.
- Digital rights management free music will become the norm on all major download stores this year - including iTunes (whose DRM-free catalogue is currently limited to EMI and indies), and social networking download facilities will grow in importance, with people recommending music to buy off their social networking pages.
- Subscription based download platforms like Napster will see some modest growth in the coming years, but free ad-funded download platforms will never really take off because they rely on restrictive DRM technology that limits play and distribution - just as DRM-free music becomes the norm in the a-la-carte download space.