Music Industry in Frenzy as Broadband Fuels Shift to Online Music Sales

Strategic Insights -

The global music industry is facing a significant shift as consumers increasingly turn to online music platforms for their music needs. Big players like Apple Computer, Microsoft, and Sony Music are vying for dominance in the multi-billion-dollar market, while retailers struggle to adapt to the changing landscape. Australia is not immune to this trend, with Telstra's BigPond and ninemsn already in the online music store business.

Key Takeaways:

  • Apple's iTunes Music Store has sold 125 million tracks at 99 cents apiece since its launch last year, making it a clear leader in the online music market.
  • The iPod commands 58% of the world market for portable music players, leaving other manufacturers struggling to keep up.
  • Microsoft has opened its own online music store in the US, but it is limited to US buyers and will not replace ninemsn's deal with British-based online music libraries, OD2.
  • Sony Music has also entered the download market, and even big department stores like Walmart have joined the fray.
  • The big record companies are watching with concern as online music sales erode CD and music DVD sales, with some estimating that music piracy has cost the Australian music industry $60 million in lost revenue.
  • Critics argue that the music industry is relying too heavily on teeny-pop sales and failing to cater to other demographics, such as baby boomers.
  • Real Networks is competing with Apple and Microsoft in the online music market, offering tracks for $0.79 compared to Apple and Microsoft's $0.99 each.
  • Other legal music sites include Napster, which was once known for its role in music piracy but is now owned by German software company Roxio.

Statistics:

  • 125 million tracks sold through iTunes Music Store at 99 cents apiece (Apple)
  • 58% market share of iPod in the world market for portable music players (not specified)
  • 60 million lost revenue due to music piracy in the Australian music industry (Record Industry Association)
  • 600 million annual revenue of the Australian music industry (Record Industry Association)
  • 60% market share of music sales in the US and Europe (Microsoft)
  • 1 million songs in iTunes Store library (Apple)
  • 99 cents and $0.79 per track prices for Apple and Real Networks, respectively

Sources:

  • Techblogger (no date) - Quotes a statement from Microsoft about its online music store and the threat posed by Apple's iPod.
  • The Sydney Morning Herald (May 13, 2005) - Reports on the rise of online music sales and the impact on retailers.
  • MarketWatch (April 26, 2005) - Quotes a statement from Apple about its iTunes Music Store and the success of the iPod.
  • Record Industry Association (no date) - Cites statistics on music piracy and its impact on the Australian music industry.
  • Roxio (no date) - Announces the acquisition of Napster.