Wednesday, July 25, 2001

Online Music Sales Will Grow 520%

Jupiter Media Metrix, a global leader in Internet and new technology analysis and measurement, today reports that U.S. consumer online music spending will grow from $1.0 billion in 2001 to $6.2 billion in 2006, a 43 percent annual growth rate over the next five years. According to the July 2001 Jupiter Internet Music Model, online music sales will represent seven percent of total U.S. music sales in 2001 and 32 percent in 2006.

Digital music sales - via single paid downloads and digital subscription models - will comprise three percent of total online music sales in 2001 and 30 percent in 2006, with spending growing from $29 million to $1.9 billion over the same period. While single paid downloads will comprise the majority of digital music sales in 2001 ($25 million for downloads versus $3 million for subscriptions), digital music subscriptions will dominate in 2006 (approximately $700 million for downloads versus $1.2 billion for subscriptions).

"The online music market has a long way to go, despite the achievements of the past year," said Aram Sinnreich, senior analyst, Jupiter Media Metrix, from the Plug.In forum in New York City. "Legal precedents 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 next hurdle will be in providing digital services at acceptable price points with the features that consumers want most, such as the ability to make copies of downloaded songs, listen to them on any device, and burn CDs."

Jupiter Media Metrix Forecast Methodology
Jupiter utilizes a wide set of data-gathering tools to conduct research, including systematic polling of leading industry executives, extensive consumer surveys, extensive executive surveys, Media Metrix audience measurement data, AdRelevance online advertising metrics and a rigorous approach to building market forecasting models. Jupiter analyses and forecasts, such as in this study, are based on a number of methodologies, including close examination of analogous markets (either previous growth of new technologies or relevant off-line market case studies), consumer self-stated intentions culled from proprietary Jupiter surveying, complex market segmentation analysis and analysis of historical trends. Additionally, all forecast assumptions are rigorously debated in a process designed to capture the collective judgment of analysts with relevant experience and perspectives on each given market.