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Saturday
- July 29, 2000
US Online Music Market to
Reach $5.4 Billion in 2005
Despite the absence of major label initiatives, consumers
have turned online music into a mass-market phenomenon, where
US online music sales are expected to reach $5.4 billion
in 2005, according to Jupiter Communications, Inc. (Nasdaq:
JPTR), the worldwide authority on Internet commerce. While
individual downloads will continue to be effective marketing
tools, the majority of digital music sales will come in the
form of online subscriptions. Labels looking to prevent market
erosion by digital music consumption must actively license
their catalogs to third-party digital music providers and
be prepared to market the resulting services in tandem with
media and commerce partners.
In what has become an annual
tradition, Jupiter today released its vision for the online
music industry during the opening session of Plug.In: The
Jupiter Online Music Forum in New York City. Jupiter projects
that the online music market will secure approximately
one-fourth of the total US music market in five years,
with digitally distributed products representing 28 percent
of total online music dollars, or a $1.5 billion market
in 2005. However, the growth of networked music sharing,
such as Napster, reveals a consumer readiness for subscription
services, which will account for $980 million in 2005 vs.
a la carte download music, which will grow to $531 million
in 2005.
Aram Sinnreich, an analyst for
Jupiter covering the online music industry, explained that
digital music has yet to yield overwhelming direct revenues,
but its impact on physical product sales has been powerful
and positive. "There has been a dramatic change in
the Internet music industry in the last year, but its not
in the number of dollars that consumers spend, it's the
whole music experience," explains Sinnreich. "What
we are seeing is the opportunity for a new format of product
in the commercial music industry, enabled by digital music
service providers who can wrap tools, technology and content
around the core library of songs."
However, one of the challenges
for subscription services will be to get consumers to shift
to them from existing services such as Napster and Gnutella.
The deciding factors for consumer adoption will be to address
two of the subscription services' their most important
features: guaranteed file quality and virus protection.
Consumers identified these two features, over other content
offerings such as artist chats, album art and an advertising
free zone, as most important in their decision to pay for
a music subscription service.
"Record labels and intellectual
property owners have demonized various forms of online
music sharing, even as it has gained enormous traction
among consumers," said Sinnreich. The truth is that
a better-informed user will purchase more music products
online and off."
A Jupiter Consumer Survey of
2,200 online music fans asked where if they had ever decided
for or against a music purchase based on a free download.
Fourteen percent responded that the download enticed them
to purchase, whereas only seven percent decided not to
purchase because they already had the downloaded song.
One in Three in Taiwan Has
Access to Internet
Almost one in three residents of Taiwan has access to
the Internet, according to an inaugural survey of web usage
released today by Internet measurement specialist iamasia
(Interactive Audience Measurement Asia). This amounts to
an estimated 6.4 million people.
The study also indicated that
the typical Internet user in Taiwan is 25 years old, with
an annual household income of NT$1,056,000 (US$34,080).
On average, Internet users are significantly younger and
wealthier than non-users, with non-users averaging 39 years
of age and a monthly household income of NT$732,000 (US$23,640).
Seventy-one percent of Taiwan's
Internet users, or 4.6 million, access the Internet from
home, 40 percent (2.6 million) in a school environment,
28 percent (1.8 million) from work and seven percent (450,000)
from Internet cafés. Of those who access the Internet from
home, 30 percent have done so for 12 months or less.
"This is by far the most
comprehensive survey of Internet-population demographics
ever conducted in Taiwan, and the first to cover such a
broad age range," said Ms. Joanne Liao, Taiwan General
Manager for iamasia. "It is also the most up-to-date,
with our fieldwork completed just this month. With our
meticulous adherence to the highest international market-research
standards throughout the entire process of data collection
and analysis, I am confident that this information will
serve as the benchmark for Taiwan's nascent Internet industry."
Of the three Greater China markets,
Taiwan has the largest proportion of women online (45 percent
of all Internet users). This compares to 38 percent in
China and 42 percent in Hong Kong. (Women comprise an estimated
49.2 percent of the U.S. Internet population, according
to a recent study by PC Data Online.)
In addition, iamasia's findings
show that ten percent of all Internet users have participated
in a form of e-commerce. The most popular items purchased
online are books, computer software and hardware, and CDs.
Based on a survey of 13,000
randomly-selected respondents from Taiwan, these findings
will be published in iamasia's NetKnowledge Taiwan report,
which will be available next month.
Kevin Tan, CEO of iamasia, said, "Following
the release of iamasia's NetKnowledge China and NetKnowledge
Hong Kong reports earlier this year, we are delighted to
be able to launch our NetKnowledge Taiwan report, which
completes our Greater China coverage. Once again, iamasia
is blazing the trail in providing timely, relevant intelligence
that will help fuel the growth of the Internet sector in
Asia Pacific."
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