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Music Sales to Rise After ‘Turning Point’ in 2013, Report Says

Music sales to rise after 'turning point' 2013 says report
A woman uses the itunes music application on an Apple iphone in London. Photographer: Chris Ratcliffe/Bloomberg

June 15 (Bloomberg) -- Global music sales are approaching a turning point as revenue from digital outlets such as Apple Inc.’s iTunes overtake purchases of CDs, according to a PricewaterhouseCoopers report.

Spending on recorded music will increase to $27.9 billion in 2014, from $26.4 billion last year, according to New York-based PricewaterhouseCoopers’s “Entertainment and Media Outlook for 2010-2014,” released today. Still, 2014 sales will be 19 percent below their level in 2005, the report said.

Music sales will turn around in 2013, according to the report, as record companies such as Vivendi SA’s Universal Music Group, Sony Music Entertainment and Warner Music Group Corp. develop new online services that generate advertising and subscription revenue. Growth in Asia Pacific and Latin America also will provide a boost as North American sales fall, it said.

“We’re about to hit that turning point in the global music market,” Stefanie Kane, a partner with PricewaterhouseCoopers, said in an interview. Digital sales will overtake physical purchases in 2011, the report said.

Partnerships with mobile phone carriers will be a critical area of growth, Kane said. Integrating music services on smartphones such as Apple’s iPhone is expanding legal ways that people can buy music, she said.

“You will see the record labels working more closely with the technology companies, with telephone companies and wireless distribution businesses, to try to figure out a model that’s what consumers are looking for,” Kane said.

Declining Sales

The firm’s outlook for rising digital sales contrasts with recent declines. Universal Music, the world’s largest record company, said in May that first-quarter sales fell 13.4 percent, including a 1.7 percent drop in digital purchases. Nielsen SoundScan said separately that U.S. purchases of digital tracks fell 1 percent in the first quarter.

PricewaterhouseCoopers said new government anti-piracy programs -- in which people who repeatedly illegally download music, movies or other content lose their Internet access -- also will help “stabilize the industry.”

Digital purchases are forecast to rise to $17 billion in 2014, from $8.1 billion in 2009, though the pace of growth is expected to slow, the group said. Physical sales will fall to $10.9 billion in 2014, down 66 percent from 2005, according to the report.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net.

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