New intermediaries — repackagers — will emerge to drive downloadable music sales to £300 million in the UK in 2005, according to a new Report by Forrester Research (Nasdaq: FORR).

“Managing downloadable music efficiently requires a combination of rights and content management skills — found in few companies at present,” said Rebecca Ulph, analyst at Forrester’s UK Research Centre. “Repackagers will emerge to solve content owners’ problems and provide the impetus that the downloadable music market needs. They will deal with security and content management concerns, resulting in securely delivered products available in flexible content bundles — meeting the needs of both content owners and retailers.”

Digitisation causes the unbundling of traditional content packages — albums — and the fragmentation of content into individual units. Neither record companies nor retailers are keen to take on the rebundling issues that fragmentation introduces. Repackagers will deal with the individual items of media, such as songs or lyrics, and put items together in new combinations to create secure products for sale or redistribution.

In the future, the ways consumers will be offered tracks will change, Forrester asserts. By bringing together content from multiple labels and artists, repackagers will make it easier for retailers to offer flexible content bundles of video, audio and text. Close relationships with consumers will allow different prices to apply to different buyers at different times. Downloadable delivery will also encourage time-sensitive promotions, and payment of a flat monthly rate for unlimited access to selected music that will appeal to users with broad tastes and a high rate of consumption.

“Customised content bundles comprising song lyrics, album artwork and selected tracks will create a more attractive buy than a track alone, especially if users can create the bundles themselves,” Ulph continued. Taking music from existing labels, unsigned bands and established artists, repackagers will make relevant content bundles available to diverse, non-traditional retail outlets making downloadable music a far more attractive proposition for content owners, retailers and consumers alike. Consumers will increasingly get downloads from non-traditional, high-street outlets, accelerating downloaded music’s acceptance amongst non-traditional listeners and non-PC owners — expanding potential audiences.

“In five years’ time, a maturing downloadable music market will allow content owners to concentrate on what they do best — artist development and promotion — whilst retailers and repackagers will satisfy differing consumer demands. Content owners will concentrate on artist development and promotion, repackagers will emerge as hubs for downloadable content and music retailers will expand their offerings. By 2005, consumers will be hitting both the Web and the high street for their music downloads,” she added.

For the Report “Repackaging Downloadable Music” Forrester spoke to executives from UK media companies, device manufacturers, digital rights management providers and downloadable music retailers. Forrester defines downloadable music as: “Music downloaded to consumer devices, playable without a network connection.”