Despite its infancy, spending in the digital music market in SA is expected to triple to 425 million rand in 2014, from 130 million rand in 2009, representing an average compound annual growth of 26.7%, according to new data from assurance, tax and advisory services group PricewaterhouseCoopers (PwC).
PwC's first edition of its South African Entertainment and Media Outlook: 2010-2014 forecast, however, that spending on digital was not expected to surpass spending on physical formats over the next five years. However, by 2014, digital spending would be more than half of physical spending, it said.
The South African recorded music market has experienced a physical decline over the past two years, losing 17.3% in 2009. The recorded music market is made up of consumer spending on physical formats and digital distribution, which consists of music distributed to mobile phones and licensed internet music downloads.
PwC stated that the physical format market would continue to decline at double-digit annual rates to 2012 and would moderate to single-digit decreases during 2013-14.
Vicki Myburgh, director of entertainment and media for PwC Southern Africa, said: “Spending on physical formats is expected to decrease to 810 million rand in 2014 from 1.4 billion rand in 2009, a 10.4% compound annual decline. Prices for digital formats are significantly lower than that for physical formats and this will result in a shift in the consumption between the two.”
According to PwC, the licensed digital market has developed relatively slowly in SA due to limited internet access. Low broadband penetration limits internet distribution because it is not easy to download from a home computer. Mobile phone downloads continue to dominate the market due to the fact that nearly every adult in SA owns a cellphone, according to the group.
“Unfortunately, digital piracy is a reality that is inhibiting growth in the legitimate digital market. Internet service providers in a number of countries have managed to slow digital piracy and in some cases graduated response measures have been introduced to warn consumers of suspected infringements,” the group noted.
“In addition, physical piracy remains a major problem for the physical distribution market but efforts to contain this setback have yielded positive results. A substantial quantity of illegal products to the value of six billion rand was confiscated in Johannesburg in October 2009 and industry losses are now estimated to have decreased from 500 million rand to 350 million rand annually,” it
concluded. - I-Net Bridge