THE EMERGENCE OF "anytime, anywhere" online digital music has not only cannibalised revenues of major recording labels internationally but is now casting doubts on the future of CDs and tape music in South Africa. <\/p>\n
Whereas CD and tape music sales have been experiencing a downward momentum, sales of individual digital tracks on services such as Apple's iTunes stores and Amazon.com have increased. Though Apple SA won't commit to precise sales figures, an industry insider says iPod sales in SA increased by 40% last year, compared with 250 000 sold over the previous corresponding period. <\/p>\n
Research conducted on the digital lifestyles of South Africans recently undertaken by SA research group BMI-T indicates that the sale of physical format music may be on the wane – even though the monetary impact on CD sales is something about which recording companies are tight lipped. <\/p>\n
Richard Hurst, an analyst at BMI-T, says: "We've observed an increase in the number of consumers from middle-income households that are buying digital music gadgets, such as iPods. The success of online music stores such as Pick 'n Play (a subsidiary of retail outlet Pick 'n Pay and Musica) indicates that South African consumers were responding positively to online mobile music." <\/p>\n
But Hurst won't say whether digital music will displace physical formats of music in the near future, presumably because the adoption of technology in developing countries such as SA will have to increase significantly before consumers switch from CDs. <\/p>\n
For its part, the industry denies any impact. Although acknowledging that it was a fledging market, record group EMI – SA's digital co-ordinator for SA and international music Tanith Blackbeard – dismissed the notion that digital music sales could in future outstrip those of physical formats. <\/p>\n
Blackbeard says CD and tape sales for big name artists contracted to EMI – including Afrikaner folk icon Steve Hofmeyr, Kwaito duo Mandoza and Hip Hop Pantsula – have been consistent. "There's been no indication so far to suggest that our artists were losing their fan base to online music." <\/p>\n
However, the international trend suggests the impact is potentially huge. The consistent decline in revenues of major music labels – such as Sony BMG, Universal, EMI and Warner in the US – over the past five years is perhaps the biggest indicator yet of the growing popularity of online mobile digital music. <\/p>\n
The IFPI – the organisation representing the interests of the international recording industry – says digital music sales, including full track downloads, tripled to US$790m in the US last year compared with the previous corresponding period. <\/p>\n
In fact, tape music in most developed markets hardly exists. Research group IDC says CD sales in the more mature US market declined 12,9% in 2006 from the previous year. Since 2000, sales have dropped by as much as 30,6%. <\/p>\n
Worldwide sales haven't fared better. For example, France – previously a burgeoning CD market – saw a 12,4% decline last year, representing a drop of 40% over four years. <\/p>\n
Whereas as physical music formats are losing their lustre, Apple has sold close to 110m of its killer mobile digital music gadget, the iPod, almost seven years after its launch. And British rock group Radiohead's decision to sell its latest album In Rainbows on the Internet further reinforces the perception that the future of the music industry is web-based. <\/p>\n
Not surprisingly, Mike Graham, Sony BMG's digital marketing director for Africa, cautions against making comparisons between mature markets such as the US and SA. "Digital music is largely confined to technologically savvy individuals. The typical user would have to have a higher disposable income and – most importantly – access to broadband. When you consider that only 2m of SA's 44m people have access to broadband, it's not feasible that digital music could have a huge negative impact on sales of physical formats of music." <\/p>\n
But is the adoption of online mobile music in SA huge enough to put a damper on sales of physical formats of music here? Given the trend towards technology adoption, without doubt, says Apple SA communications manager Megan Richardson. "Unlike in the past – when iPod only peaked during the festive season – sales have been consistently good throughout the year." <\/p>\n
With the introduction of the iPod touch boasting an onboard Wi-Fi functionality that enables the user to connect to the Internet from any Wi-Fi hotspot, Richardson is upbeat regarding sales. <\/p>\n
Though online digital music has become a compelling proposition in the SA market, research analyst Arthur Goldstuck says the biggest challenge confronting the rapid uptake of digital music sales in SA is the high cost of broadband, PC compatibility and the consumer's understanding of DRM software. Says Goldstuck: "There are also issues about pricing and accessibility. How many distribution outlets do Musica and Pick 'n Play have?" <\/p>\n
Those are questions all industry stakeholders – consumers, artists, recording companies and digital technology companies – may soon have to confront.<\/p>\n