London, UK (October 15, 2007)–Verdict Research reports that legal digital music and video downloads jumped over 80 percent during the past 12 months in Britain to £112 million ($227.8 million). The UK market analyst predicts that downloads will be worth £163 million ($331.5 million) by the end of this year and could reach £600 million ($1.2 billion) a year by 2012.
According to the UK Music and Video Retailers 2007 report, “Music and video retailing is in the midst of traumatic change with established music and video specialists needing to fundamentally alter their business models to retain their appeal with customers. While digital downloading offers a low cost platform to sell to shoppers, it also means high street music and video retailers need to reinvent their propositions to continue to trade from high street locations profitably.”
Although legal downloads currently account for only 4.1 percent of the total music and video market, the report forecasts that figure will rise to 13.5 percent over the next five years. According to the report, the overall UK music and video market is down nearly 3 percent to £4 billion in 2007 due to decreasing CD and DVD sales.
The report, released in the week that UK band Radiohead received international attention for releasing a new album online and allowing fans to set the price, considers the widespread introduction and adoption of DRM-free content to be a boost to the market. New services from Nokia and Amazon.com will further boost sales through competition, the report predicts, and enhanced services from UK brick-and-mortar retailers adapting to the market will challenge the dominance of Apple’s iTunes Store.