Report: Digital sales won't cover CD dropoff

Analysts project music industry revenue to fall by 2013

DENVER -- A new report from Jupiter Research forecasts digital music will contribute 41% to total U.S. recording revenue by 2013, compared with the 18% it represents today. This is based on a compound annual growth rate of 17% during the next five years.

But this figure will not compensate for falling CD sales. The company's analysts see a drop in overall music industry revenue from today's $10.2 billion to $9.8 billion, a negative compound annual growth rate of 0.8 percent by 2013.

In five years, more than half -- 55% -- of Americans will be purchasing downloadable music, but only 24% say DRM-free sales will influence their decision. Another 75% of the population will own MP3-capable phones by 2013, but most will use them to play sideloaded music. Jupiter says over-the-air download sales to mobile phones will contribute only $300 million to the pie in five years.

Subscription service will be no help, either, with the company projecting slight growth from 2.7 million to 4 million music subscribers by 2013.
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