MP3s: music's savior, not slayer
Forrester Research, in "Downloads Save the Music Business," predicts that downloads will generate $2.1 billion for labels by 2007. According to this Fortune article:
Currently, of course, downloads generate nothing but headaches for the Big Five record companies. RIAA numbers show the number of albums sold sank 10.3% in 2001 and have sagged another 7% this year, "decisively debunk[ing] the theory that stealing music online is somehow good for the music business," says the organization. It could get worse. If you believe the data from now-defunct Webnoize, pirates downloaded 3.05 billion files a month from the top four sites alone in 2001. Assuming that there are ten songs per album, that's more than the number of CDs sold worldwide in 2001 (2.5 billion). In fact, the only thing propping up the industry might be laziness. "People find it surprisingly difficult to do simple things," says professor and intellectual-property expert Stanley Liebowitz, author of the forthcoming Rethinking the Network Age. "As it gets easier to burn a CD, you could see more of a negative impact on sales."
So what's with all the savior talk? Forrester predicts that after one more year of depressing sales, labels will supply more content on the cheap; the story goes that by 2007 this will create a downloading wave of tsunamic proportions that will wash all this additional money onto the music industry.
...Even if the new wave of services are perfect, will people pay at all? Some analysts think the price needs to drop to 25 cents to draw significant traffic. But if even a portion of downloaders cough up that much, suddenly the music business doesn't look so bleak.