The Guardian
trending topics
Close Box

Register now

Our next conference: paidContent 2012, March 1 in NYC.


Where The Digital Music Business Is Headed In 2010 (And Why 2009 Was So Disappointing)

  • Comments Comments (View)
  • Text Size: A A

Lots happened in 2009, but it wasn’t a vintage year for digital music (in fact, it was the year digital music lost the digital buzz to e-readers). All in all I’d give 2009 a 6 out of 10, with the launch of Spotify accounting for at least couple of those points. Here are five of biggest disappointments of the year:

1. Comes With Music underwhelmed (as did Play Now plus)
2. ISP services didn’t get off the ground (including unlimited MP3’s nearly-but-not-quite moment)
3. Apple’s new killer music format was….oh, iTunes albums
4. imeem gave a master class in how not to make money from social music
5. The big boys (MySpace, Apple) snapped up the innovative competition (Lala, iLike, imeem)

So will be 2010 be any different? I don’t think it will be the year digital music really comes of age (that’s at least a couple more years away), but I do expect it to be stronger than 2009. Here are my predictions next year:

Apple (NSDQ: AAPL) launches a major refresh to the music experience: There are many things Apple could do with music in 2010.  Whatever the company does, it has to do something significant if it is going to stay on top of its game. The company spent much of 2009 collecting user data via the Genius app and it has picked up some top-notch streaming and programming expertise via the Lala acquisition. And, of course, it is busy developing (with content partners) the forthcoming touch-screen note book.  Here’s hoping that this will all add up to something like an integrated on-device, connected, interactive and immersive music experience where the cost is bundled into the price of the device (perhaps with the touch-screen note book as the flagship device for the offering). Apple wouldn’t be in the game of hiding the cost of music to the consumer (a la Comes With Music) but it may use content-subscription bundling as a way to maintain premium price points and differentiation for its devices. (I’ll caveat this first prediction with the disclaimer that Apple make a habit of proving wrong those of us foolish enough to try to second guess them.)

MySpace deepens its focus on music: Though MySpace will spend most of 2010 simply ingesting iLike and imeem, the acquisitions form part of a longer-term strategy to breathe much-needed new life into MySpace’s music role. The new management talent is tasked with pulling MySpace from the brink of becoming a garbled also ran and dragging it by the collar into the second decade of the century.  Though MySpace is unlikely to admit it, the mainstream social-networking race against Facebook is as good as over. By contrast it remains the No. 1 destination for artist communities online, yet without a major reinvention it’ll start to feel the competitive pressure bite there also.

Spotify scales back its U.S. launch: Spotify appears to be paying the price for the major labels having second thoughts about ad supported on-demand content. Those pesky U.S. licenses have been proving tough to tie down and I’d expect to see Spotify’s U.S. launch to be more strongly focused on the premium tier than it is in Europe. If so, it could actually prove to be something of a blessing for the Swedish upstart, allowing it to consolidate the monetization of its core user base rather than building a U.S. ad business from scratch white millions of free U.S. subscribers add cost to the bottom line. Whatever the case, Spotify’s European revenue fundamentals should improve in 2010.

ISP music services don’t pack a killer punch: I’m a firm believer that ISPs will become established as a core element of the digital-music value chain and the best way of fighting piracy head on. In 2010 we’ll see more services launched both in the U.S. and in Europe, especially the UK. But I don’t see anything yet to suggest they’ll be adequately provisioned to flourish. It’ll take another year or two of revenue decline for the labels to adjust their license requirements sufficiently. What do I think will work? Five pounds / euros / dollars a month for household access to near unlimited (i.e. fair use) MP3.

Semi-pro sites and services prosper: I’m not sure I’d go as far as to say 2010 will be their year, but it will certainly see continued growth for the likes of SellaBand, MyMajorCompany and Tune Core. These sites that create a route to audiences for artists either not good enough or not yet good enough for record deals play to the strength of the Internet as a social channel for artists and fans. Which of course is all the more reason for MySpace to be watching its back.

Mark Mulligan is an analyst at Forrester Research, where he serves, and contributes to the Forrester blog for, Consumer Product Strategy professionals.

Dec 14, 2009 10:00 AM ET

Music Dog Photo: Flickr/BL1961


Posted In:

(Page 1 of 1)


The Bestsellers

From iTunes and YouTube to Facebook and Kindle, the most popular content on the web, free and paid.

Hulu TV Hulu TV
1. M&M's: It's That Kind of Party
2. Volkswagen: The Bark Side Teaser
3. Doritos: Man's Best Friend
4. Livin' On a Prayer
5. Woman Reveals JFK Affair On ‘Rock…
See The Other Bestsellers »

Jobs RSS Job Listings

Social Standing

Which media brands are getting a lift from Tweeters and bloggers right now -- and which are getting panned?

"Sentiment" Scores for All the Companies »

Sponsors

Staff