Entertainment downloads are up – What’s Next?

Free user-generated online video content exploded in 2006, and now 2007 looks like it will be a bumper year for paid music, movie and television content.

The majority of all digital content will be distributed over the Internet in the near future, and while that process is well under way in the music business, 2007 will see the TV and movie industries dip their toes in the digital waters.

The ripple effect will be widely felt.

eMarketer forecasts that US consumer spending on digital music, movies and TV, which was $1.3 billion in 2005, will approach $7.8 billion in 2010.

“In 2006, iTunes successfully expanded its product line to include TV and movie downloads, and with Amazon and AOL opening their own digital download stores, the paid content market is set to rapidly grow,” says Ben Macklin, eMarketer senior analyst and the author the new Digital Downloading: Music, Movies and TV report. “While a growing amount of Internet users are paying for digital content, that number still represents only a small fraction of the Internet users who regularly view or listen to online multimedia content.”

In addition to the billions of dollars that will be spent by consumers in the coming years on digital music, TV and movies, rich media advertising will also expand rapidly over the forecast period.

“As online music services such as iTunes have penetrated markets outside the US, digital music sales have increased rapidly,” says Mr. Macklin.

According to recent data from the International Federation of the Phonographic Industry (IFPI), 11% of recorded music sales in mid-2006 were digital downloads or subscriptions (including mobile music), up from 5.5% at the end of 2005 — double the rate in only six months.

Data from iCrossing indicate that the most popular media type purchased online is digital music, followed by ringtones. As for paid video content, 11% of respondents indicated buying or attempting to buy movies, compared with 6% for online TV shows.

“The iTunes model has worked for music, but can it work for movies?” asks Mr. Macklin. “Amazon, GUBA, Movielink, Movieflix, CinemaNow, AOL and others are all hoping that it can, and 2007 is likely to be the year when we see if it does.”

For more information at http://www.emarketer.com