Digital music to be worth US$7B in APAC

The Asia-Pacific region will account for 35 percent of global digital music revenues, tuning in at US$7 billion by 2015, according to new projections from Ovum.

Released Tuesday, the report revealed that strong demand in subscription services will drive the market's growth in the region, to clock in a compound annual growth rate (CAGR) of over 28 percent between 2010 and 2015. Worldwide revenues for digital music will reach US$20 billion in 2015, said the analyst firm.

Among Asia-Pacific economies, China and India will see the highest revenue growth between 2011 and 2015, clocking 56 percent CAGR each, followed by the Philippines at 28 percent. Digital music revenue growth will chime in at 22 percent in Australia and Indonesia; 17 percent in Thailand; 15 percent in Taiwan; 14 percent in Singapore, Hong Kong and Malaysia; 11 percent in Japan and South Korea; and 12 percent in New Zealand.

However, Ovum noted that the Asia-Pacific digital music industry will not yield optimal revenue due to the amount of free music available online.

Ovum analyst Mark Little said in the report: "Digital music will experience what might appear to be healthy growth over the next five years, but there is a danger that this could mask the fact that the industry is not maximizing revenue potential.

"There is too much free music available in the digital economy and not just the illegal kind. Free Internet radio such as Pandora or Grooveshark, and freemium on-demand music services such as Spotify, are offering free music without maximizing advertising or premium subscription revenues for themselves or the industry."

An increasing number of consumers in the Asia-Pacific region will see the benefits of accessing millions of streamed songs for the price of a CD each month, driving CAGR for music subscription services at over 40 percent between 2011 and 2015.

Demand for such services will also be boosted by Apple, Google and Spotify, which Ovum said will all be launching digital music subscription services this year. The research firm noted Sony unveiled its "Music Unlimited powered by Qriosity" cloud service last month.

Increasing demand for subscription services, alongside the significant amount of music freely available online, have slowed growth of paid online music downloads to just 3 percent last year in the United States. Ovum expects this downward trend to similarly play out in the Asia-Pacific region.