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Monday, 23 July, 2001, 15:53 GMT 16:53 UK
Online music sales set to soar
Record shop interior
Will online music sales kill off the record shop?
US spending on online music will rocket from $1bn in 2001 to $6.2bn (4.3bn) in 2006, according to the internet research firm Jupiter Media Matrix.

The firm predicts that by 2006, 30% of these US online music sales will come from digital downloads and music subscriptions.

That is a big rise from 2001, when they made up just 3% of online sales.

Online music sales - including buying CDs via websites - are expected to reach 32% of total US music sales by 2006, up from just 7% in 2001.

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The majority of these online sales will come from subscription services, the survey says.

Madonna
Madonna's label Warner Brothers is looking to set up an online music service.
It also believes that the value of one-off paid downloads will reach $25m this year against just $3m for subscriptions.

But by 2006 they think the situation will have reversed.

Jupiter is forecasting $700m of download sales, but subscriptions will generate 1.2bn of sales.

"The online music market has a long way to go" says Aram Sinnreich, senior analyst at Jupiter Media Matrix.

"Legal precendents have been set and label-backed digital music services are preparing to launch, but this is only the beginning of the changes the music industry must undertake."

The race is on

All the world's largest music companies are planning to launch online music services later this year.

Sony and Vivendi are to launch a service called Pressplay, formerly known as Duet.

Napster logo
Napster: helped a generation get used to free music from the net
Meanwhile AOL Time Warner, EMI and Bertelsmann are developing their own service MusicNet.

Jupiter says these new ventures will raise the quality of music services offered over the net, but won't offer the total flexibility consumers want.

Their survey found the two most important features Amercian users wanted were the ability to make copies of downloaded songs, and the ability to listen to songs on any device.

Neither MusicNet nor Pressplay will have these features when they launch.

And while these two services are being readied for the US market, it could be a while before Europe gets the same level of choice.

"European customers are going to be left in the cold," says Mark Mulligan, European analyst for Jupiter.

He sees this as a chance for independent operations such as the Italian owned music website Vitaminic to steal a march on the major labels and build up their own presence on the net.

Will the customer pay?

The major record companies may face a battle to persuade people to pay to download music from the net.

Many internet users have grown used to being able to get tracks for free from the net using song swapping services like Napster.

And although use of Napster has dropped sharply since a court ruling earlier this year forced Napster to remove copyrighted material, a number of rival services have sprung up.

But there's good news for the big record companies from Jupiter's latest survey of people's willingness to pay for online music.

According to its June 2001 consumer survey, 59% of US online music buyers - defined as those who bought music online in the previous 12 months - are interested in buying subscriptions, up from 41% last year.

See also:

20 Jul 01 | Business
Napster use slumps 65%
12 Jun 01 | Business
EU opens online music probe
19 Jul 01 | New Media
Napster can go back online
18 Jul 01 | New Media
Napster counts on latest technology
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