Recorded Music Retailing in Australia Industry Market Research Report Now Updated by IBISWorld

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Music piracy and competition from department stores effectively robbed the recorded music industry of revenue over the five years through 2011-12. While the industry benefited from a new revenue stream in the form of digital downloads, growth in illegal downloading, coupled with price discounting by retailers such as Target, Kmart and Big W created a volatile market for music retailers. Trading conditions across the recorded music industry will continue to undergo a period of transformation during the year. While digital music downloads will account for an increasing share of recorded music sales, the operating landscape for retailers will remain tough due to continue high levels of price-based competition. For these reasons, industry research firm IBISWorld has updated its report on the Recorded Music Retailing industry in Australia.

IBISWorld Market Research

IBISWorld Market Research

Growth in illegal downloading, coupled with price discounting by retailers has created a volatile market for music retailers

Music piracy and competition from department stores effectively robbed the Recorded Music Retailing industry of revenue over the five years through 2011-12. According to IBISWorld industry analyst Claudia Burgio-Ficca, “While the industry benefited from a new revenue stream in the form of digital downloads, growth in illegal downloading, coupled with price discounting by retailers such as Target, Kmart and Big W created a volatile market for music retailers”. The result was an annualised decline in revenue of 5.1% over the five-year period. Industry sales are set to decline by 3.6% to $1.01 billion during 2011-12. While digital music downloads will account for an increasing share of recorded music sales, the operating landscape for retailers will remain tough due to continue high levels of price-based competition. Due to their low selling price compared with physical items, growth in the volume of digital downloads will have little influence on total industry sales or profit levels for the year. In total market terms, goods retailed by the industry may also be purchased from a range of other avenues including department stores; domestic appliances stores; and newspaper, book and stationery retailers.

Recorded music retailers will experience a volatile market over the next five years, with industry sales expected to fall. Future threats to the industry will include the continuing issue of music piracy and file-sharing among consumers, which will rob the industry of valuable revenue. There will be greater collaboration between record labels, government and internet service providers to find a solution to the continuing issue of music piracy. “Sales will also be affected by continued shifts in the way consumers purchase music items, from whole albums to single tracks”, Burgio-Ficca adds. In response to this, the industry is expected to embrace innovative and supportive new ways of selling music.

The Recorded Music Retailing industry has faced a fragmented market over the past five years. During this period, the industry has becoming increasingly polarised with many small retailers and two key players. The domination by these two key players has ultimately led to a high level of market share concentration across the industry. Over the past five years, the increasingly competitive nature of the industry along with the added pressure of music piracy had led to a decline in the average price of CDs and affected revenue for several players. Operators such as Brazin Limited responded to these market conditions via acquisition (Brazin purchased HMV in October 2005) while other players such as JB Hi-Fi embarked on a national and international store expansion program. Both of these strategies led to an increase in the degree of concentration experienced by the industry.

For more information, visit IBISWorld’s Recorded Music Retailing report in Australia industry page.

Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau

IBISWorld industry Report Key Topics

Businesses in this industry operate as retailers of recorded music products including physical CDs and music DVDs along with digitally downloaded music via internet sites.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.

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Gavin Smith
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