Despite a continued decline in compact discs sales, digital music is red-hot and is projected to rise to about $2.5 billion by 2011, according to an industry forecast by JupiterResearch.
Much of the growth will be from paid downloads, which is projected to increase from $808 million in 2006 to $1.7 billion in 2011, growing at a compound annual growth rate of 16%, JupiterResearch said. MP3 players like the Apple iPod and other digital music players help fuel the popularity.
Digital sales, which include music downloads and subscriptions, will make up 22% of U.S. music spending in 2011, the company projected.
Ringtone sales, which are not part of the study, are projected to grow to $1.4 billion, accounting for 12% of music spending. Together ringtones and digital music will equate to one-third of consumer spending by 2011, the company said.
Despite projections for large growth in digital music downloads, there is slow adoption for subscription music services. The majority of people using the service are mostly niche audiences of music aficionados. But, it’s on the rise. Spending on digital music subscription services will increase from $188 million in 2006 to $745 million 2011, according to the survey.
“Strong indications of digital substitution are finally appearing among early adopters of digital music,” JupiterResearch said. “Still, the music downloads business will remain a sampling medium for many users rather than a CD replacement.”
JupiterResearch surveyed 2,232 people in August. Respondents answered questions about their behaviors, attitudes and preferences related to music consumption.
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