Future of the Music Industry

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Future of the Music Industry

It seems as though the first era of digital music may have come to an end. Napster died, P2P lived in some black market twilight zone, streaming services on ad-supported revenue were suffocated by unsustainably high licensing fees, and subscription services sputtered along, never quite capturing the imaginations of music fans. 2009 ended in a flurry of acquisitions (LaLa, iLike (Ilike)), launches (Vevo) and shutdowns (iMeem (imeem)), which dramatically rearranged the digital music landscape. When the dust finally settles, expect digital music to begin anew. With that in mind, here are my five predictions for music in the next 12 months.

1. Labels Will Get Smart

It’s been coming for more than a decade, but major labels are starting to grasp the digital opportunity. They’re licensing music on more sustainable terms, diversifying their business model, investing in new technology and, most critically, understanding more than ever what it means to be truly consumer-led. As market leaders, major labels have the resources and the networks to profit most from the changes currently taking place. The move from physical to digital hasn’t been as fast as many people might have wished, but that’s because digital still doesn’t pay like physical does.

CDs, when they sell well, still mean big money. Digital isn’t like that. But that’s changing, and as major labels have shrunk, their capacity for change has increased. Expect 2011 to be the year that the bad press on the major labels starts becoming more favorable.The promises of the digital age, with a deeper understanding of the music consumer, integrated ticketing and merchandise, direct-to-consumer sales, and fans as marketing teams, are all about to become a reality, and major labels will lead the charge.

2. Physical CD Sales Will Continue to Decline

To ensure at least one of my predictions comes true, I’m going to forecast that globally, sales of physical...
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