In 1999 Napster almost killed the music industry. Apple’s iTunes appeared and finally got people to start paying for digital music downloads, but it wasn’t unveiled until four years after Napster.
“That four-year lag is where the music industry lost the battle,” says Sonal Gandhi, music analyst with Forrester Research. “They lost an opportunity to take consumers’ new behavior and really monetize it in a way that nipped the free music expectation in the bud.”
Now, eleven years since Napster, the music industry is worth half of what it was in 1999. According to Forrester Research, the total revenue from U.S. music sales and licensing plummeted to $6.3 billion in 2009, that is a $8.3 billion drop in revenue since 1999. On the converse, Forrester is also saying that CD sales will be declining at about the same rate that digital downloads are growing. Continue reading