Sales of downloaded digital music in Europe will continue to grow steadily in the next five years, but will not replace the CD anytime soon.
That's according to a report by Jupiter Research called "European Digital Music: Identifying Opportunity," which predicts that digital music revenue will reach €836m, or eight per cent of the total market, by 2009.
"Our figures show strong adoption of digital music but it will remain a minority pursuit. We're forecasting single digit percentages of penetration over the next five years comparable to the impact of mini-disc players, which haven't revolutionised the way people consume music yet. That said, digital music devices will have a stronger role as time goes on but its not about to replace the CD," said Mark Mulligan, lead author of the Jupiter report.
This extensive report based on consumer surveys, interviews with online music executives and Jupiter's ranking of every legitimate online music service in Western Europe in areas such as catalogue availability and pricing.
Western European digital music revenues have grown considerably in the last 12 months, from €10.6m in 2003 to €46.3m. Growth was driven primarily by new market entrants such as iTunes and Napster who both launched services in June 2004. More recently Stelios Haji-Iannou, of easyJet fame, announced the launch of easyMusic, his online music store.
The popularity of online music has prompted a number of heavyweights to establish an online music presence. At the beginning of September Microsoft launched the MSN music store and Yahoo! bought digital music company Musicmatch. Yesterday, Virgin announced its launch into the online music market in the US with a view to expanding to other regions in the future.
As for who will succeed in this competitive industry; the Jupiter report expects companies who are not singularly focused on online music, but have other pre-existing revenue streams like selling devices or providing broadband access, to thrive.