The future of the music industry

Here’s a very cogent report on trends in the music industry summarized by eMarketer.com.

The bottom line:

– Between now and 2011, the music industry will grow worldwide at an average annual rate of just over 2 percent.

– Sales of CDs, which currently account for 55% of the industry’s total revenues, will continue to decline sharply, falling to 29% of the overall business by 2011.

– Will the exponentially booming digital segment compensate for the losses in physical sales? The answer is a qualified “no.” But growth in other sectors will make up for the shortfall, resulting in modest net growth overall. That growth will come predominantly from online and mobile music, the live concert industry and the licensing of music for public performances, commercials, TV shows, films and video games.

Note that reference to the licensing of music. That’s at the heart of the streaming rate hike controversy currently on every Internet radio station’s front burner. And that also explains why, I believe, the music industry will soon be knocking on traditional radio’s door looking for a much bigger slice of the pie.

When it’s content you own, distribution is key. And distribution is acquired via licensing (unless, of course, you own the distribution, too).

The future of the music industry is, in part, to sell its wares to licensees who value that content more than the folks who steal it via P2P.