I launched MP3.com in 1997 and have been kicking around the digital music business for a decade. Here are my predictions about what you can expect to see in 2008, which will be more eventful than any of the last ten years.
1) All four major labels get the MP3 religion.
During the monumental Universal Music Group v. MP3.com trial in early 2000, it was uncovered that The Recording Industry Association of America (RIAA) had an initiative to block the growth and adoption of MP3. Court documents revealed that the RIAA paid people to track me and take notes on my speeches so they could devise counter-plans. They sued the first commercial MP3 player -- Diamond Multimedia's Rio. (They lost, which is why you have your iPod today.) Major public relations campaigns were launched to smear the MP3 format.
Seven years later, the music company EMI broke ranks and announced it would sell its music catalog in MP3 format. Recently, Universal Music made part of its library available in MP3 format via Amazon's music store. In 2008, you will see Warner Music feel the pressure of declining CD sales and offer their catalog via MP3. Later in 2008, watch for the pioneer of proprietary formats, Sony, after a year of mourning the aborted atrac format it was pushing at Connect.com, to finally relent and make its catalog available. By the end of 2008, every major music label will offer catalogue-wide MP3 sales via Napster, Wal-Mart, Amazon, and Best Buy.
2) The CD becomes the $0.50 lure for the digital album.
For two decades, the CD has been the monetary mainstay of the music industry. Widespread digital music player adoption has lessened the need for CDs. So 2008 will see the continued deterioration in CD sales, nearly matching the 25 percent decline in 2007. Plus, the prevalence of CD burners and pallets of blank CD bundles at Costco have educated people to the fact that CDs cost pennies to make. Music fans have actually made many more music purchases in 2007, but the average purchase price went to single digits from double digits.
How do you make someone pay for nine tracks when they only lust for one? Throw in a free CD for the bookshelf. "Rebundling" is the keyword for the industry next year. Progressives in the music industry realize that the best use for CDs is to entice that 99 cent purchaser to spend $9.99 on a digital album. If the industry grosses a $10 sale instead of a $1 single, that's a net positive of $7 after paying 50 cents for the CD and $1.50 for shipping.
3) Digital music insurance replaces storing files under your mattress.
The explosion of online music stores makes it a snap to amass hundreds or even thousands of dollars in music with just a few clicks. Unfortunately, it's just as easy to lose files through user error, hardware failure, or some other digital catastrophe. Geeks will spend thousands on a home media server, only to have it stolen and, with it, their entire digital library. People will realize that storing your digital possessions on home computers is like putting your money under your mattress.
Savvy music buyers will get a free personal music locker, like the one from MP3tunes where ALL their music purchases will be automatically backed-up from any store they frequent. No need to worry about losing your music, because it will be safely stored online, serving as a digital music insurance policy. Once there, music fans will realize that this is more than just dormant backup copies. They can sync their song library to any computer, stream it on any Net-enabled device, and listen to it on Internet radios like Logitech's Squeezebox or Terratec's Noxon. But I'm getting ahead of myself. Facebook-like popularity for music lockers is my prediction for 2009.
(Disclosure: I am CEO of MP3tunes.com, and I hope you read this and sign up for a free music locker.)
— Michael Robertson, Founder of MP3.com and current CEO of MP3tunes