Original URL: http://www.theregister.co.uk/2006/01/23/emi_chief_digital_music_forecast/

Digital music to cover lost CD sales

EMI says music industry to bounce back by 2010

By Tony Smith

Posted in Hardware, 23rd January 2006 12:12 GMT

Digital music will make up a quarter of the music industry's sales within four years, according to Eric Nicoli, the chairman of music giant EMI. But don't look to subscription services, such as Napster and RealNetworks' Rhapsody, to deliver the growth, he says .

"Our belief is that the [total] market will be bigger in 2010 than it is today - and potentially much bigger," Nicoli said in an interview with newsagency Reuters.

"We've seen a tripling [of download sales] in the last year and we've hardly gotten started," he said. "The day is surely within our sights when digital growth outstrips physical decline and we can all compete for share of a growing pie."

A dig at market leader Apple? Maybe, but Apple's success suggests other horses backed by the big labels haven't provided the competition for Apple's iTunes Music Store service as well as the majors had anticipated. Nicoli admitted that rental services like those offered by almost every digital music company except Apple haven't proved as popular as hoped.

"We thought subscriptions would be huge - they haven't been," he said. As for the mobile music market, pitching song downloads at phone users, the situation is no better. "We're at year zero - if that - with mobile", Nicoli said.

According to the EMI chief, allowing consumers to download individual songs from an album - the so-called 'unbundling' of music - rather than forcing them to buy all the tracks is crucial to the success of the digital market.

"The pessimists will say that's a problem, but our research suggest that the net effect of unbundling is a positive," Nicoli said.

Last week, the International Federation of the Phonographic Industry (IFPI) said record companies made more than $1.1bn on legal digital music downloads last year - three times what they received in 2004. It said some 420m individual songs were downloaded via the internet legally in 2005 - more than 20 times the quantity downloaded in 2003 and enough to account to six per cent of record labels' combined sales. ®