By 2007 third of music will be sold online

iTunes sold 20 million tracks in its first seven months of operation. Rhapsody?s 250,000 subscribers paid to listen to 28 million songs in October, up from 11 million in June. Between June and November, music lovers bought 7.7 million songs online, but only 4 million single-song CDs at stores. The future looks good, too. Jupiter Research expects online music sales to grow to $3.3 billion by 2008. Forrester Research, for its part, expects that within just four years online music will account for 33% of the music industry?s sales.

Online music doubles MP3 hardware sales

Ipsos-Insight found that 19% of U.S. downloaders own a portable digital audio player/portable MP3 player – up from just 12% in December of 2002. Jupiter Research expects U.S. shipments of MP3 players to practically double in 2003 to over 3.5 mil, and will continue to grow almost 50% per year for the next several years. In a 2003 Jupiter Research consumer survey, 6% of online adults said they would be buying a portable music device in the next 12 months, and the likely buyer is male (over 70%) and under age 35 (over 65%). Nearly 60% of customers in the market to buy a player will be shopping online for the holidays, seeking convenience and the ability to mail gifts directly.

Demand for Music Subscriptions and Downloads
Type of Consumer
(number sampled)
Subscriptions Downloads Will Not Pay
for Music
Music aficionados (357) 21% 25% 46%
Free-music fans (514) 13% 19% 60%
CD purists (280) 10% 16% 71%
Passive populace (746) 7% 10% 79%

Ipsos-Insight estimates that roughly 10 mil Americans – or 16% – paid to download music or MP3 files off the Internet, while only 8% paid during the fourth quarter of 2002 and 13% paid in the first quarter of 2003. “A twofold increase in the number of American downloaders exposed to for-pay music downloads in just a six month timeframe signals a remarkable shift in downloader behavior,” said Matt Kleinschmit, director, Ipsos-Insight. Among the age groups, those 18 to 24 are the most likely to have paid to download digital music, while 12 to 17 year olds were among the least likely. “Downloaders of all ages are clearly beginning to experiment with fee-based online music distribution in increasing numbers,” said Kleinschmit.

Jupiter: $80 M in digital music sales in 2003

Jupiter expects online music industry revenues to quadruple over the next five years, to be worth $3.3bn by 2008, when web sales will account for one in four record purchases. Jupiter does not expect digital sales to surpass $80m this year, yet iTunes alone reaped $1m in revenues within a week of launching its Mac-based service in April and has now sold $14m worth of music. It launched a Windows version two weeks ago and generated $1m in three days.