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Online music makes up for CD sales losses

Online music sales will grow rapidly over the next five years, predicts a survey.
None | By Reuters, Amsterdam
PUBLISHED ON MAR 28, 2006 12:19 PM IST

Online music sales will grow rapidly over the next five years, although traditional music sales will still make up almost two thirds of revenues in 2011, a survey by market researcher Forrester said on Monday.

The study forecast a 30 per cent decline in European sales of traditional music formats like CDs and DVDs, but music downloads on the web from shops like iTunes Music Store from Apple will fill the gap.

Online sales are seen growing more than tenfold to 3.9 billion euros ($4.70 billion) in 2011 from 279 million euros in 2006.

The total music sales market will grow to nearly 11 billion euros by 2011, up from less than 9.5 billion euros now, as the new sales channels will boost demand.

The survey coincides with the launch of new services aimed at boosting the take-up of online music sales. Mobile technology and services companies mBlox and NewVisions on Monday introduced a mobile phone delivery system which includes the network charges for mobile phone download of music.

Until now, these network fees were often several times the price of the 2 euro ($2.41) song itself.

"They just pay one, one-off price, of around 1.50 pounds ($2.62)," said U.S. transaction firm mBlox which negotiated wholesale tariffs with carriers like Vodafone.

Music publishers Ministry of Sound and V2 will sell the songs straight from their sites for mobile phones, without going through the portal of a mobile carrier.

This will be another catalyst that will boost digital music sales, said technology consultant Jolyon Barker at Deloitte.

"Digital music sells best when sold in the most appropriate format for the end devices, as shown by the market for ring-tones which are designed specifically for mobile phones and mobile phone networks," Barker said.

The shift to online music will mean more sales of single tracks rather than whole albums, Forrester said.

British mobile carrier 3 said on Monday it had reached average sales of over 200,000 single music tracks per month.

The French parliament passed a law last week that will force online music stores to sell their songs in a copy-protection format which can be used on multiple devices, potentially opening the digital songs market to more competition.

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