While digital music will return the U.S. music industry to growth after four years of steeply declining sales, digital music still will not replace CDs or bring music sales back to its 1999 peak.
Over time, revenues for digital subscription services will outpace those of digital download, which will remain a market for potential buyers to sample music before purchasing the actual CD in the near-term. “The so-called celestial jukebox is in sight,” said JupiterResearch VP and Senior Analyst David Card. “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),” added Card.
Meanwhile, U.S. shipments of MP3 players will grow over 50% in 2004 to well over 5 million, and will continue to grow almost 50% per year for the next several years. “A lot of the action in hard drive-based devices will be at the low end in terms of price and capacity that will help drive the market,” stated JupiterResearch VP and Research Director Michael Gartenberg. “JupiterResearch surveys show that 77% of consumers who would purchase a portable music player would want no more than 1,000 songs on a player at any given time, regardless of the size of their music collection,” added Gartenberg.
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