Fact sheet - The Legitimate Online Music Market

Key Facts

TRACKS AVAILABLE

• There are at least 1 million tracks or 80,000 albums now available on some online music services, bringing the equivalent of a Megastore into the home.
  
  
• There are at least 450,000 tracks on any one service, across Europe.

SITES

• There are more than 100 online music sites in Europe and over 150 globally
  (1 October, 2004). The cross-industrywww.pro-music.org site now features a comprehensive worldwide directory of legitimate online services.
  
  
• At least 10 services in Europe have a presence in two or more markets.
  
  
• As well as the big pan-European players a variety of specialised services in Europe are also appearing, including charity download sites Bignoisemusic and Warchildmusic.
  
  
• New players in the US market: Microsoft's MSN Music Service and Yahoo's purchase of Musicmatch in the US are significant additions to the pay-per-download and subscription markets in the US.

CUSTOMERS

• Some 4 million Europeans have paid for online music (Forrester, August 2004).

SALES

• Download sales reached 2 million in the UK by September. Average weekly sales in the UK were 300,000 (The Official Chart Company).

Highlights of new online music services internationally in 2004

First half 2004 launches:

• MyCokeMusic.com launched in the UK in January
• Puretracks, the Canadian online music service surpassed the one million downloads mark in February 2004
• Napster 2.0 launched in the UK and Canada in May
• Sony Connect launched in US in May
• In Germany, AOL Germany launched a new service with over 100,000 tracks. T-Online expanded the catalogue of its new service Musicload to 100,000 songs, following its launch in February 2004
• Phonofile (Denmark providing a new digital platform where, via four new online services a comprehensive digital catalogue of Danish music can be legally downloaded)
• Sony Connect - UK, France and Germany
• Apple iTunes - UK, France and Germany

Expected launches:

• Apple iTunes - European roll-out to other European markets besides UK, France and Germany
• Rhapsody - UK
• MusicNet (Europe)
• Yahoo (US and Europe)

The Online Music Market in Europe

The market for legitimate music downloads and subscriptions is rapidly taking shape in Europe. In the UK, Germany and France the launch of iTunes in June 2004 more than doubled the available catalogue - up to 1 million today. Catalogue on more than 40 other online retail sites - driven by OD2 - has reached upwards of 450,000 tracks.

Europe's most vibrant online music market is the UK, where download releases are aggressively marketed and downloads are now available to the mass market. The Official Charts Company launched the download chart in August.

UK sales of music downloads in September 2004 were averaging 300,000 last week. The UK has over 30 legal services on offer, including the most recent launches from Mean Fiddler, Karmadownload and charity-connected sites Bignoisemusic and War Child Music.

Current Online Music Services - By Market

The US Online Music Market

The US market for online music sales is showing the way for the rest of the world. Analysts Jupiter forecast that the US online music sales will reach $US 1.5 billion by 2008, with pay-per-download and subscription services sharing the revenues half-and-half.

Download sales have proliferated in the last year. In September 2004 Nielsen SoundScan reported US download sales for the year at 85 million, with Apple iTunes providing about 70%. The iTunes Music Store (ITMS) announced cumulative sales of 125 million downloads since launch in April 2003.

Subscription based services - including Rhapsody, Musicmatch, MusicNet and Napster 2.0 - have a combined number of subscribers exceeding one million. MSN Music Service and Yahoo - which is expected to invest in building a music subscription service after the purchase of Musicmatch - will provide further impetus to the US market in 2005.

iTunes and the new Virgin Digital shop have just announced available catalogues of 1 million tracks, well in advance of expected forecasts.