• by Jack Loechner , Staff Writer @mp_research, March 28, 2006

Stephanie Guza, Industry Analyst, summarizing In-Stat's most recent online music report, says that the Internet is now a key distribution channel for legitimate digital music sales, and the mobile phone is also evolving into an important channel for digital music.

Other conclusions, excerpted from her report, include such things as:

• Online sales of digital music represented almost 6% of the total worldwide music market in 2005. This figure is up from virtually zero in 2003.
• According to the International Federation of the Phonographic Industry (IFPI), paid-for digital single downloads reached 420 million in 2005, which is more than double the number of digital singles downloaded in 2004.
• Another method is subscription-based services, with the overall subscriber base reaching 2.8 million, up from 1.5 million in 2004.
• Online song catalogues doubled to nearly 2 million songs on all major online music services. In addition, the number of legitimate music sites reached 335 worldwide, up from 50 in 2003.
• Mobile phones have evolved from basic voice-based handsets to multimedia handsets used for different functions such as voice, data, music, music distribution and video.

Guza says that "...Consumers are clearly opting for legal ways to purchase music, more legitimate music sites are available, and increasing broadband access is enabling online music distribution like never before. Despite this progress, vendors in the market still face significant obstacles. Internet piracy, interoperability concerns, and the unlicensed use of digital streams represent real challenges to the growth of this market."

For access to the complete online music market report, please visit here.