Indicate positive growth over the next five years.
The revenue decline in Australian recorded music business will be halted this year and the business can then look forward to positive growth over the next five years. That’s the upbeat message from accountants PricewaterhouseCoopers’ annual “Australian Entertainment & Media Outlook 2006 — 2010”, released in Sydney yesterday (Aug. 2).
Matthew Liebmann, the author of the 208-page report and and a PWC director, estimates that the recorded music market will be worth Australian $956 million by the end of 2006. It was valued at Australian $533 million in 2005, by the Australian Recording Industry Association (ARIA).
“We think 2006 will be a turning point for the recorded music industry,” Liebmann says. “After a couple of years of negative growth, the declines in the physical CD area will be offset by growth in legitimate downloads and ringtones. Going forward we see positive growth returning to the sector.”
By 2010, PWC forecasts that the legitimate download market will have more than tripled in revenue to $253 million, which by then will account for 22 percent of a total recorded music market of $1.131 billion.
“Ringtone revenue will also continue to grow from $78 million to $209 million,” Liebmann continues. “This is a reflection of more sophisticated handsets, greater penetration across the whole of society for tailored ringtones and the transition to more expensive truetones than we are seeing at the moment.”
However, he notes that concern has already been raised about the pricing of digital downloads and says it is vital that the record companies share the benefits of digital distribution rather than just keeping all the savings.
“It all comes down to charging a reasonable price and giving customers flexibility,” he says. “If customers feel that they are getting ripped off—that doesn’t mean that they are, it can just be their perception—they have the means to steal music.”