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Tuesday, September 02, 2003

The Future of the CD

I have no idea whether the assumptions on which the Forrester study are based are realistic or not, or whether the future of music and film is with file sharing or paid downloads, but regardless of the difficulties inherent in such forecasting something similar is bound to happen. With more and more people comfortable with downloads, convenience is bound to win out. Additionally with virtually infinite possibility, physical ownership and 'possesion' may be coming to the end of its days in this area. The death of the material is in sight. BTW, and as an example, while I was chatting with Margy about Bulgarian immigrants this morning - and effectively being given a de-briefing from Sofia - I was opening my e-mails and found one from Amazon about UK population history . Checking this out I found four other books of interest, all in the space of about five minutes, and all, remember, while holding a virtual meeting. Of course I put them in my stand-by cart, until I have time to decide whether I really want them, but that isn't the point: shopping has never been so easy or so comfortable. Dot.com bust. He - or she - who laughs last laughs best. (Final pedantic point: it's just plain obvious to me that societies with relatively higher proportions of young people are going to have a natural advantage in all of this. Talking of which T-Salon has a useful piece about some Chinese equivalents of Amazon ).

Forrester Research on Tuesday predicted a steep fall in CD sales, as audio and video file sharing over the Internet continues to emerge as a preferred option among consumers. The firm said 20 percent of Americans engage in music downloading, and half of the downloaders said they are buying fewer CDs. By 2008, 33 percent of music sales will come from downloads, with CD sales down 30 percent from their 1999 peak. On-demand movie distribution will generate $1.4 billion by 2005, and revenue from DVDs and tapes will decline 8 percent, Forrester predicted.

"The shift from physical media will halt the music industry's slide and create new revenues for movie companies, but it will wreak havoc with retailers like Tower Records and Blockbuster," Josh Bernoff, principal analyst at Forrester, said in a statement. "As a result, we're about to see a massive power shift in the entertainment industry." The music industry's plan to sue individuals for online piracy through software such as Kazaa might pay off. In the Forrester survey, more than two out of three young file sharers said they would stop if there were a serious risk of jail or a fine.

In the next nine months, at least 10 Windows-based music services will emerge, creating alternatives to illegal file sharing. America Online already has 90,000 MusicNet subscribers. Musicmatch and RealOne Rhapsody will try to differentiate their media players with Web radio; BuyMusic will try to take advantage of its early entry with personalized recommendations from ChoiceStream. And Apple Computer will release a Windows version of its popular iTunes service.

Forrester predicted that by the end of 2004, Apple and possibly Musicmatch will emerge as leaders, file sharing will be in decline, and downloads and on-demand subscriptions will bring in $270 million. Surging online revenue--including subscription services--will increase music sales by more than a half billion dollars in 2004, according to the study. The research firm said music companies and studios are realizing that they must create new channels for online delivery. Consumers, tired of paying high prices for CDs and DVDs, are looking for flexible forms of on-demand media delivery. "Technology trends like increased broadband adoption and cheap, widespread storage have made it possible for consumers to easily manage their digital entertainment at home," Bernoff pointed out.
Source: CNet

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