The European online music market generated €120m in 2005 from à la carte sales (that is, the sale of music tracks over the Internet either individually or in an album bundle) and subscription platforms. Online music subscriptions accounted for only 10 per cent of this total. Screen Digest expects the total online music market to grow to €1.1bn by 2010, driven by à la carte offerings.The UK continues to be the largest single consumer territory for online music in Europe, expected to generate around 40 per cent of total European online music revenues by 2010.
As a whole, the digital segment, which also includes exploitation of services over mobile phones, accounts for between 1 per cent and 4 per cent of total 2005 music revenues in the European territories. According to the International Federation of the Phonographic Industry (IFPI), master ringtones are currently the largest segment of the mobile market accounting for 87 per cent of mobile music sales.
The online segment is expected to account for 12 per cent of total European music revenues by 2010 and the European digital music market is still approximately one third of the equivalent market in the US and will remain bigger in the mid-term. Arguably this is due to cultural, legal, economic and technical barriers hindering exploitation of digital music on both a national and a multi-territory basis.
The fundamental value chain of the music business can be segmented into three sectors, production, distribution and exhibition/sales. That is:
– creation of content;
– distribution to outlets;
– sale/transmission to the end customer/end user.
The main stakeholder categories therefore fall within one or a combination of these
responsibilities. Companies that are considered the traditional power base of the industry, the four major record labels Universal, Sony BMG, EMI and Warner Music, are primarily involved in the business of creation and distribution.
The music business model is not very complex if compared with other forms of media and the sale of audio recordings can still account for up to 80 per cent of a major record label's total revenues.
The remainder of the European music download market is a fragmented field largely consisting of services either using DRM solutions from US software giant Microsoft, or providing unprotected MP3s. There are cross-industry attempts to promote interoperability between DRM technologies used in the consumer media market (i.e. Coral Consortium; but Apple and Microsoft are not members of this consortium) but lately DRMs have been heavily criticized and there is a tendency to eliminate them for music as they are easily circumvented.
in http://ec.europa.eu/avpolicy/docs/other_actions/col_swp_en.pdf , pág. 13