Study: Music Online Not All Bad for Retailers

A report commissioned by the US National Association of Recording Merchandisers (NARM) released Monday tells retailers to buckle up for a rough ride.

In perhaps an obvious statement, the report composed by the strategy arm of Internet consulting firm Emerald Solutions. says digital distribution, particularly file streaming technology, will seriously disrupt the music business. Hearings in the copyright infringement trial of Napster, set to resume Monday, serve as a recent example, as do the court findings in favour of the Recording Industry Association of America (RIAA) copyright infringement claims against MP3.com last month.

Emerald Solutions started its analysis from the presumption "for planning purposes, that we believe the legal system will make continued widespread piracy unlikely," said Michael Norkus, president of Emerald Solutions' strategy group. That said, online music will change the balance of power and the competitive position within the industry.

"It separates the content from the container. The question is how will that make life different for people who make their living moving the physical goods," he said.

Online music sales have the potential to benefit all segments of the industry if companies can leverage their traditional strengths and create compelling consumer value propositions, said Norkus. Because of technological and financial hurdles in the early stages of setting up an online music store, the businesses with experience, money and a brick-and-mortar brand name are better prepared to succeed in online music retailing.

But even as retailers move parts of their business to virtual reality, physical reality isn't going anywhere. Even though the number of online music orders may increase, consumers will still want to order physical CDs and go to real stores, said Jim Donio, executive vice president at NARM.

"A lot of the soothsayers and prognosticators could have been making it look like stores are going away in a year, that CDs are going away," said Donio, executive vice president at NARM. "I think that right now, for the foreseeable future, people are confident that physical CDs in a package in a store will be the mainstay for the future. That doesn't mean that this [digital] distribution method won't be growing ... but the research says it's going to be a small part of the business."

The future threat to retailers comes not from downloads of digital music, but from streaming audio online, said Norkus. "The real surprise we think is in streaming. Streaming right now is more like radio on the Internet, and it's no big deal right now," he said. "Increasingly, streaming allows for highly targeted content, almost to the point of listening on demand. The streaming business is quite different from the record retailing business, and the skills and competencies are not directly transferable."

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

GGG Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?