By Patrick Ferraris, Nicolas Auberty and Tushar Rao
While the overall global music industry is growing, the recorded music segment is in decline. Although digital music revenues have been growing strongly, they have been unable to sufficiently offset the steep decline of the entrenched physical recorded music business. In particular, the value of the recorded music business is being depressed by changing consumer behaviors driving the “unbundling” of the album, non-traditional competitors making disruptive moves across the music value chain, and also the effects of online and physical piracy. Despite these alarming trends, there are a number of opportunities for players in the recorded music industry to stimulate their revenues. Music labels can offer value-added physical and digital content that consumers are willing to pay a premium for. Music industry players can also offer consumers a more flexible download value proposition by offering
DRM-free music as well as pricing models relevant to the way they consume digital formats. In addition, music labels can partner to create aggregation platforms, which provide genre recommendations in order to drive cross-selling opportunities, and they can also evaluate alternative music distribution options.
