In a recent post in Digital Music News, Tom Silverman, founder of Tommy Boy Records and The New Music Seminar, was quoted as stating that smart phones may be the key to reviving the recording industry which has drastically declined from a peak of 38 billion dollars in 1999 to a 16 billion dollars in 2011. Tom was quoted as stating:
“The number I've heard recently is that there are about 200 million music buyers in the world. And there are about 7 billion people in the world … if we can make that 200 million grow to 250 million, we can make a little bit more money. But that would only take the net world music business from $16 billion to $20 billion. It won't take it back to its peak in 1999. It will just make it a little bigger.
"But none of this will take us to a $100 billion worldwide business. The only way we'll get there is by finding a way to monetize “passives” [people who are not paying for pre-recorded music] ... there are 1.2 billion smartphones activated now, which means smartphones that are actively being used, with active subscriptions that have been paid for. The trend everywhere is moving towards smartphones. The entire world is going to open up to that level of accessing music.”
What I perceive to be the key to the future of the music business is whether mobile carriers will include services such as Spotify in their basic plans. Then people will not have to feel that they are paying "twice," once for the mobile service and again for the music service. For instance, Spotify requires you to pay for mobile service beyond a free trial period. I used the trial on vacation and loved it but was not inclined to pay once I returned home because I get Spotify for free on my PC and dont usually listen to music on my smart phone.
Why would a mobile service pay Spotify to include it on their basic plan? I was deciding recently whether to go with AT&T or Verizon for my new iPhone. I chose AT&T for 4G. But if Verizon was offering "free" mobile Spotify I may have signed up with them instead of AT&T.
If the mobile services offered authorized music services as part of their basic plans, those services would be far more successful by making money from the carriers (getting a split of subscription revenues) and would have more money to pay music owners. Of course there would still be the issue of whether indie artists would see more money, but the big labels and music publishers certainly would.
