Online Music & Web 3.0 (Part 1)

Overview

Online music has come a long way from the Napster years. Today there are many more legal sources of digital music and these have been growing over the past few years. Many consumers are willing to pay for music downloads and this has resulted in the emergence of Apple’s ITunes Music Store. But the illegal sharing and downloading of music still thrives thanks to P2P sites like Kaaza, Grokster, etc.

Online music is currently one of the most popular forms of entertainment over the Internet. A survey conducted by Piper Jaffray & Co. shows that about 46.2% of the Internet population use the web for searching and downloading music. In 2006 Internet users downloaded as many as 6.7 million songs per week.

In 2005, 8% of US Internet users paid for digital music and the numbers increased to 23% in 2006. In 2006, 76% of US Internet population spent $1-$5 on music downloads a week, 14% spend $5-$10 and 9% spend $10-$20 a week. About 90% of consumers buy at least one song per week. Nearly 55% of users listen to streaming music online and 65% of those listen to music during work. 42% of users are loyal to only one digital music source while 29% used two sources.

US online music revenues are expected to grow from $1.1 billion in 2006 to $3.0 billion in 2011 driven by music downloads and subscription fees. Online music download and subscription revenues will grow by nearly 50% in 2007. 82% of the total online music revenues will be from paid downloads, while the remaining 18% will come from subscription fees.

(To be Continued)

This segment is part 1 in the series : Online Music & Web 3.0
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