Digital-Music-Report-2014

digital music in 2014LIGHTING UPNEW MARKETSAND MODELSThe music industry is continuing its transformationinto a global digital business, expanding into newmarkets and extending new access models to moreterritories across all continents. Record companiesare successfully delivering music through digital channels,broadening the world of licensed music, and innovating tobring artists to a global audience. Music still leads the wayfor other creative industries — including books, films and TV— in monetising its core product for the digital world.The move to mobileUnderpinning these developments is the global shift ofmusic consumption to smartphone-based mobile platforms.Digital music has moved rapidly from a fixed line desktopPC experience to on-the-go consumption on wirelesssmartphones and tablet devices. Record companies are nowmonetising the consumption of music in ways that were notpossible a few years ago.“The advent of the smartphone as a musiclistening device has been profound for themusic business.”— Ole Obermann, Sony Music EntertainmentThe smartphones boom is an unprecedented opportunityfor the music business. At the end of 2012, just 12.9 per centof mobile devices worldwide were classed as smartphones.With penetration forecast to reach 36.2 per cent by the endof 2016 (Portio Mobile Factbook), there is huge potential formobile to increase the reach of music services. Accordingto Ole Obermann, executive vice president, digital partnerdevelopment at Sony Music Entertainment: “The advent ofthe smartphone as a music listening device has been profoundfor the music business. With 30 per cent plus of the world’spopulation projected to own a smartphone by 2016 thatequates to over two billion potential music service customersworldwide.”Record companies are harnessing the power ofsmartphones with a new generation of partnerships.For example, Warner Music has signed a deal with Shazamto boost its marketing and A&R activity. The record companyrecently launched Linkin Park’s single Guilty All The Sameexclusively on Shazam, with users who had previouslyShazamed the band getting advance notification of therelease and all those using the service on the day of thelaunch getting a link to the track.Increased competition between the Android and AppleiOS platforms has opened the market and widened consumerchoice. Streaming services, in particular, are thriving onAndroid devices. According to Stephen Bryan, executivevice president, digital strategy and business development,Warner Music Group: “Android has created a number of newopportunities for us to reach consumers with different suitesof services. As consumers are moving to the Cloud, many ofthem are ending up in the Android eco-system where we havea lot of very high quality services waiting for them.”Access & ownershipDigital music is also moving from a model based largely onownership to a more multifaceted model built around access.This is breaking down the traditional distinctions between the“Android has created a number of newopportunities for us to reach consumerswith different suites of services.”— Stephen Bryan, Warner Music Group16