I like to point out what other really smart people are saying and this is one of those instances. Below is an excerpt from some essays and a book by Gerd Leonhard titled "The Future of Music". Check out these notes and visit his site at www.mediafuturist.com.
Eight Predictions for the Future of Music - This is from an essay originally published for the Club of Amsterdam...
Music Like Water: Music is no longer a product but a service. Music became a product with the advent of recording (records, tapes, CDs) and the formation of an industry that quickly figured out that selling the bottle can make a lot more money than only selling the wine. For the future, think of a “record labe”l as a “music utility company.”
A Bigger Pie, But Cheaper Slices: Today's music pricing schemes will be completely eroded by digital music services (legal, and, mostly, otherwise) and by stiff competition from other entertainment products. A “liquid” pricing system will emerge, involving subscriptions, bundles of various content types, multi-channel/multi-access changes, and countless added-value services. CD prices will end up around €5-7 per unit. But most important, the overall music consumption and use will steadily increase, and – if the industry can manage the transition to a service-based model – can eventually bring in €50-90 per person per year, with 75% of the population in the leading markets as active consumers - the pie will be three times as large.
Diverse and Ubiquitous: A wide range of music will be everywhere, and music will be part of everything that used to be “images only”: from rich media advertising to interactive slide-shows to car software to MMS and digital cameras, to advertising in magazines (!), the audiovisual use of music will soar, and the licensing revenues will explode along with it.
Access to Music Will Replace Ownership: Soon, consumers will have access to “their” music anytime, anywhere, and the physical possession of it will in fact be more of a handicap or a knack of collectors. Music will feel (and act) like water. Multi-Point Access to Music Will be the Default Environment, allowing consumers to fill up their music devices at air ports, trains stations, and in coffee shops and bars, using all kinds of wireless connections as well as other on-demand and ad-hoc networking technologies.
Go Direct: Major artists will increasingly rely on their own “brandability” and – via their managers – go direct to the consumers, using their own in-house marketing, branding, and promotion teams.
The Software Pro: The (performing) rights organizations (PROs) as we know them will likely fade away. Compare technology solutions comprised of watermarking and fingerprinting, so called DRM and (better) CRM components, monitoring, admin/accounting, and instant payment solutions will do the job quicker, cheaper, and, of course, with complete transparency.
Mobile Mania: Cell phones and other wireless devices will eventually utilize and suck up more “content” than any Internet Service or P2O client ever has. Real-music ringtone offerings, Multi-Media SMS (MMS), Java-based games, wireless streaming audio and video, i-Mode type applications, and other cell-phone based offerings will proliferate very quickly, at first in Europe and Asia, followed by the U.S.