Online music services cost US$700m in CD sales

A new report from Forrester Research claims the music industry lost nearly US$700 million in CD sales last year through the proliferation of online music download and subscriptions services.

The latest report, entitled ?From Discs to Downloads?, also concludes on-demand and fee-based media services, such as the iTunes music service launched by Apple earlier this year, will overtake piracy in the near future.

?Piracy and its cure – streaming and paid downloads – will drive people to connect to entertainment, not own it,? the report stated.

With the aim of monitoring how piracy, legitimate downloads and streaming services affects the consumption of CDs and video, the Forrester report predicts 33 per cent of music sales worldwide will come from downloads and online subscriptions by 2008, rather than hard media sales.

As a result, revenues from CDs will be down 19 per cent by 2008, while DVDs and tapes will drop 8 per cent, the report states.

Adding to this view, 49 per cent of the 12- to 22-year olds surveyed by Forrester in the US who downloaded music last month said they now buy fewer CDs.

The research firm derived its US$700 million figure using estimates on the total number of CDs which would be bought by the 23 million or so ?juvenile pirates? and ?retro rippers? identified in the US by the research firm if they did not download music files from file sharing services on the Web.