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Thursday, 15 May 2008 Music industry research warns of shrinking download market

New research claims the percentage of music fans regularly paying for downloads is shrinking

Jonny Evans

UK music industry luminaries have released a report which claims file-sharing usage has failed to fall while the percentage of music fans regularly paying for downloads is shrinking.

Research specialists The Leading Question and digital strategy agency Music Ally have released some details from the new research, warning that the music industry must quickly change its business models to survive.

“Many UK music fans are telling us they are dissatisfied with the current legal, paid for digital music experience. They might buy a few tracks from iTunes when they get a new iPod for Christmas but few go on to become regular paying downloaders,” said Tim Walker, managing director of The Leading Question.

“The statistics are obviously worrying but the research does offer clues as to how fans who merely dabble can be encouraged to engage fully with licensed digital music services.”

The research revealed that the percentage of music fans regularly buying music downloads has gone down from 16 per cent in 2006 to 14 per cent by the end of 2007. However, music fans do pay for an average of 3.32 single track music downloads each month - and half digital collections (51 per cent) come from ripped CDs.

As many music fans (28 per cent) have paid to download music from a licensed service at least once as have tried downloading from a file-sharing source - but, the researchers claim, more will then continue to file-share rather than pay for downloads on a regular basis (22 per cent for file sharers compared with 14 per cent for paying downloaders.

Paul Brindley, managing director of Music Ally, added that the music industry needs to look at other ways of creating value and has to stop relying on traditional schedules and formats. “Business models need to change radically if the music business is to stand any chance of halting the current decline in sales. It doesn’t have to be all doom and gloom.”

The researchers have announced a five-point plan for change based on their findings:

- Music needs to be bundled with other products and entertainment packages.
- Labels must experiment with new release schedules and formats.
- Free doesn’t mean no money - revenue can be generated from other sources, the researchers claimed.

The final finding? Online means anyone can access or own John Peel’s entire record collection, but the instant and massive availability of music on demand means you need a trusted guide like John Peel more than ever. The new layers of value will come from the social connections that come about through music as much as from the music itself.

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