Although the German recorded music market has lost half its value in the last decade, the head of one of the industry’s major business organizations believes better times are ahead.
Stefan Michalk, chief exec of the Berlin-based Federal Association of the Music Industry, said business will be boosted by the growth of the digital market and subscription models such as Spotify and Napster.
The not-so-good news is that in Germany, where only one of eight downloads is purchased legally, the turnaround won’t come for another four years.
Presenting figures from a survey by the GfK market research institute in Nuremberg, Michalk said digital business is expected to contribute about 20 percent to revenues in five years. It was only 7 percent in 2008.
Based on data from research with 25,000 consumers and interviews with experts in the record music and digital sectors, he said experts project an average annual decline of 5 percent in the physical market for the coming five years but 17 percent growth in digital sales.
Further earnings are expected to come from the licensing business, such as the streaming of products available on YouTube or MySpace.
Only 20 percent of music fans make digital purchases, but that’s expected to jump from 5 million to 15 million in the next five years.
Michalk said many of the new buyers will opt for the music bundles offered by Internet service providers, as increasing broadband penetration is creates new target groups.
The German download market reports that more fans are choosing to buy digital albums. Sales of bundles grew by 50 percent from 2.6 million units in 2007 to 3.9 million units in 2008. Single downloads also grew from 39.9 million in 2007 to 44.6 million in 2008.