Global digital music revenues will hit more than $20 billion by 2015, driven by strong growth in subscription services, according to a new forecast.

However, while this is a CAGR of more than 20 per cent from 2010 to 2015, the music industry is not maximising digital music revenues mainly because of the amount of free music available online, said the report by UK-based Ovum, a leading advisor on the commercial impact of technology and market changes in ICT.

Ovum analyst Mark Little said: “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 maximising 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 maximising advertising or premium subscription revenues for themselves or the industry,” he added.

Ovum’s forecast predicts that globally, revenues from music subscription services will grow at a CAGR of more than 60 per cent from 2011 to 2015, as consumers recognise the benefits of being able to access millions of streamed songs for the price of a CD every month rather than owning individual downloads.

Subscription growth will also be driven by technology giants Apple and Google, as well as the newly launched Spotify, which are all expected to launch digital music subscription services this year, the report said.

The combined effect of an increased share taken by music subscription services and the large amount of free music available is slowing growth in paid online music downloads, down to just three per cent in 2010 in the US – a trend expected to cross the channel before long, according to the report. – TradeArabia News Service