New Research Sharply Questions Digital Music ‘Penetration Rates’…

This raises even more questions about digital growth, and calls nearly every bullish research report on music into question. It’s a very different digital/physical revenue breakdown for some of the largest worldwide markets, compiled by market research firm IBISWorld.

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The findings sharply disagree with data published by industry trade groups like the IFPI, which report majority digital revenues in countries like the US.  Instead, IBIS doesn’t see digital overtaking physical worldwide until 2017, within a far smaller industry.  “Many of the industry’s largest companies have failed to leverage a crop of potential new revenue streams to properly compensate for the extreme drop in physical album sales over the past five years,” the group flatly assessed.

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The stats were shared with Digital Music News as part of a broader research report by Siemer & Associates.

Written while listening to Jorge Aragao.

15 Responses

    • Visitor

      The interesting thing about these penetration rates is that PHYSICAL PRODUCT SALES are weighted towards the top 200 titles and key catalog being sold at major chain stores and racks.

  1. Turgid Weaselton

    How about releasing the whole report? This chart is interesting, but it doesn’t break down label v. publisher, performer v. writer, retail v. wholesale, etc. Inquiring minds want to know!

    • Tune Hunter

      It is totally different chart?

      No matter which numbers we observe the statement below is very polite!

      “Many of the industry’s largest companies have failed to leverage a crop of potential new revenue streams…”

      The largest companies are actually in process of demolishing their own business: VEVO acid creation or total green light for streaming are the biggest proof of ignorance and lack of creativity.

      Time to recognize existing resources switch to Discovery Moment Monetization and double the business in three years.

  2. radioredrafts

    People wanted their music for practically nothing, just a click of the mouse and a quick download. Now they may be lucky to get it at all. The fable of the goose that laid the golden eggs comes to mind.

    The bright side to this is that most of the no-talent pretenders might get out of the business and leave it to the ones with a real passion for music. Maybe there’ll be more music on the radio and less noise.

    • rikki

      As a dj i always belived that people want a cheap copy to use once and dispose of, but a real fan would want the best copy and willing to pay for it.

      I very seldom pay for any downloads but i have bought at least 30 cds just this year

    • David

      That’s not how it works. With shrinking resources, record companies concentrate more and more of their invsetment on a few safe bets, like talent show starlets.

    • Visitor

      “Am I missing something with these stats?”

      No, IBISWorld is. I haven’t seen numbers like this for ten years, or so…

      • Yes Villeneuve

        Agree. These numbers were pulled out of a hat or “digital” represents something entirely different than downloads or streaming. This research group is made up of clowns.

  3. This can't be right.

    In the US, it’s not possible that physical is still this high. There aren’t any record stores left!

    • Minneapolis Musician

      Walmart, amazon, Target…

      Commercial country and pop music, not indie stuff.

  4. kieron

    This is unintelligible without a definition of what ‘Penetration Rate’ is supposed to mean. Is it a precise synonym for revenue or isn’t it?

    Given that it is not called revenue we have to assume it is something different.

    • Paul Resnikoff

      Defined by IBIS as ‘sales’

      from the report:

      “Digital music is expected to exceed physical music sales by 2017 as developed countries continue to overcome their technological challenges and emerging markets see rapid mobile proliferation and expanded connectivity.”

      That prefaces the chart.

  5. CTM-The Rights Company

    At first glance, this goes against the grain of most the so called “industry experts”, but from my own research and industry/market observations, it seems to ring “more true” than anything I have seen. Please publish or direct us to where we can find the entire report…This could be an entire “issue” for Digital News…….Also, I agree that in order to truly understand these numbers, we need the clear definitions of the perameters used to arrive at these conclusions…Good Job Digital News……!