No wonder there’s so much competition for digital music downloads: Sales will more than double to $270 million this year from last year, then grow sixfold to $1.7 billion by 2009, Jupiter Research reports.
Although digital music will return the U.S. music industry to growth after four years of steep declines in sales, it will not replace CDs or return music sales to their peak of 1999, Jupiter says. It adds that revenue from digital music subscription services will grow faster than revenue from separate downloads, which will mostly serve as a means for sampling music titles before purchasing a CD, Jupiter says.
"The so-called celestial jukebox is in sight," says David Card, vice president and senior analyst. "But for now, it will appeal to music aficionados. The U.S. music industry must manage digital music as one of a series of incremental revenue streams, one that is in the same scale as licensing (e.g., ring tones, games and advertising)."
Jupiter adds that shipments of MP3 players will grow more than 50% this year to more than 5 million, and continue to grow nearly 50% per year for the next several years.
The digital music market is playing out in robust sales at several providers. Apple Computer Inc.’s iTunes, for instance, reports that it has sold 100 million digital songs since launching about 15 months ago. And Roxio Corp., which is selling off its software operations to concentrate on digital music and changing its name to Napster, its digital music brand, sold 300,000 songs in its first week of operation last November.