Healthy Growth Seen For Online Music Market Through 2010

The online music market is expected to increase sevenfold by 2010, with revenues from music downloads and subscription services expected to top CD sales on the Web by next year, a research firm said Wednesday.

Worldwide revenues from downloads, subscription services and CDs bought over the Web are expected to reach $10.7 billion in 2010 from $1.5 billion last year, In-Stat said. The numbers show that the Internet has evolved into a key distribution channel for legal digital music sales.

Even though an increasing number of consumers are turning to the Web for music, it's not expected to have a major impact on music piracy, which is expected to continue.

"Internet piracy is always going to be here. It's not going away," In-Stat analyst Stephanie Guza said. "(More legal Web sales) won't alleviate the problem, but what it is doing is showing vendors in this space that there's a growing revenue opportunity."

Indeed, revenue from music downloads and subscription services are expected to surpass CD sales over the Web by 2007. The online market in general, however, is expected to remain a smaller portion of the overall music market than offline sales. The total market in 2005 was about $33 billion, Guza said.Meanwhile, a consumer survey by In-Stat found nearly half of the respondents had downloaded music from the Internet, with 64 percent saying they had paid for the music. The largest percentage of respondents who had bought tunes online said they spent $10 to $20 in the last 12 months.

The most popular site was Apple Computer Inc.'s iTunes, which had been used by 53 percent of the music buyers.