US Digital Music Sales

US Digital Music Sales - U.S. digital music sales, both digital downloads and subscriptions, will grow at a compound annual rate of 17% during the next five years, says a study by Forrester Research Inc. By 2013 digital music will make up 41% of the music market.

The growth in digital music sales will not compensate for the decline in CD sales, notes the Forrester Research study, “U.S. Music Forecast, 2008 to 2013.” As a result, the overall music market will shrink by a compound annual growth rate of 0.8%, to $9.8 billion in 2013.

According to a recent consumer survey by JupiterResearch, which was acquired by Forrester Research in July, 56% of adults who pay for online downloads including downloads to personal computers and mobile devices - are under 35. But their ranks have increased from 15% of overall online adults to 18%, the study says. And they no longer skew male: 53% are female. They tend to be wealthier and spend slightly more on music compared with average Internet users.

Online subscriptions, by contrast, still attract a niche demographic of heavy music fans. Like paying downloaders, subscribers tend to be younger; but unlike downloaders, they are much more likely to be male (58%). They also spend more on music than downloaders do. While both segments are very active online, subscribers perform music-related online activities at levels two to three times higher than average Internet users, the study notes.

Both segments are big consumers of music on MP3 players, but subscribers seem to be the early adopters for music on mobile phones: 23% of subscribers listened to music on their phones compared with 13% of downloaders. Subscribers are less likely than downloaders to own an iPod and more likely to own another brand of MP3 player or a music-capable mobile phone.

The mobile phone as a music source hasn’t caught on yet, as only 6% of online adults listen to music via that medium. Of those who do listen to music on phones, 64% are under age 35, and 55% are male and somewhat wealthy.

The market of mobile phone-based music listeners has plenty of room to grow. The study estimates that in 2013, the installed base of MP3-capable phones will reach 240 million. Assuming a one-person-per-phone relationship, 75% of the U.S. population will have an MP3-capable mobile phone in the next five years.