Popularity of net-connected devices to drive demand for content, says Gartner

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Issue Date: 
Nov 9 2011 - 12:55pm

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Gartner logoA new study indicates that consumers worldwide are becoming more willing to spend money for premium online music content -- including subscription-based and (to a lesser degree) ad-supported Internet radio (which Gartner lumps in with subscription-based services in their study).  

As consumer spending on CDs and LPs is expected to slide from $15 billion to about $10 billion 2010-2015, Gartner forecasts end-user revenue for online music sales and services will grow more than 31% over that same time span: from $5.9 billion in 2010 to $7.7 billion in 2015. Subscription services (e.g. Spotify, MOG, Rdio, Pandora) alone will take in $532.1 million this year, growing to $808 million next year. 
Gartner chart
While the more mature "a la carte" download market will still drive the bulk of overall online music revenue (a projected $3.62 billion will be spent on downloaded music this year) through 2015, music subscription services are expected be the main growth sector in this market. Gartner says the music subscripton segment itself will show fivefold growth from 2010 to 2015, accounting for nearly one-third (29%) of end-user online music spending by 2015.

"We expect that their (a la carte music download) growth will slow down as more consumers begin to turn to subscription services that are leveraging the popularity of consumer smartphones, media tablets and, in the future, devices such as TVs with Internet connectivity built in," reads a "top line assumption" from the Gartner report. "We include advertising-supported Internet radio services with this class of offerings — for example, Pandora, which offers advertising-supported and monthly subscription options (although our focus is on the end-user spending, rather than on the advertising revenue)."

Read Gartner's press release here; and the report findings here (.pdf file).

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