Music industry optimistic about digital future

The music industry is going through a lot of changes as it tries to grapple with the move to digital, but these days it is much more upbeat about the future.

The music industry is going through a lot of changes as it tries to grapple with the move to digital, but these days it is much more upbeat about the future.

"I actually think it's a really exciting time in the development of digital music business," said Ian Henderson, vice president, EMEA Digital Music Development at Sony BMG Music Entertainment, in panel discussion on the future of music at the ETRE08 conference in Stockholm on Thursday.

He sees three major trends that will start to take off this year, but really make an impact during 2009. Two of them are a la carte downloads in a non-copy protected form and selling music bundled in with other products (including Nokia and Sony Ericsson handsets, broadband or mobile access packages). "The consumer pays for a device or a telco tariff, and the music is bundled in," said Henderson.

The last trend is free for the user ad-supported music. "MySpace has an element of that, and there is a fantastic company right here in Stockholm called Spotify, which I think is going to be a leader in this space," said Henderson.

All are pretty big jumps for the music industry in terms of trying new things, and an important step as it tries to give consumers a lot of choice, instead of downloading it free. "You have to offer consumers free music in an environment where you get compensated, and you have to offer them cheap 99-cent downloads, all the music they want in a telco package or a premium box set for $50," said Henderson.

Music in the mobile phone has received a lot of attention lately, thanks in part to the launch of Nokia's Comes With Music, which bundles unlimited downloads for a year with a mobile phone.

Music in this space used to be all about ring tones, but that market is not what it used to be, and downloading separate songs has never really worked, according to Henderson.

Besides digital music, there is also growth in other areas. The economies around live music are also growing, according to Jamie Kantrowitz, senior vice president at MySpace, who was on the same panel.

"One of the advantages of technology is that artists can also build larger and broader audiences," she said.

The music industry is currently in a state of flux, but the record companies still have a roll to play, even in the digital age. "It's really easy for a one-man record label to get his music onto iTunes, but you do still need large companies like Sony Music to create global super stars, and to take artists to the level of a Britney Spears or a Christina Aguilera," said Henderson.

The physical business will not go away completely, either. It will bottom out at some point and also change in nature, according to Henderson. "Sony Music will become increasingly focused on how to create premium products, box sets and special editions," he said.

In the end, it isn't Nokia -- or any of the other companies that currently are getting a lot of attention -- that has impressed the panel the most. Instead that honor goes to Simon Cowell, best known as a judge on TV shows such as "Pop Idol" and "American Idol," and Disney, which has had great success with the "High School Musical" franchise.

"Disney is genius," said Kantrowitz.

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