Digital music to outpace physical media by 2007

Sales of digital music will outpace revenue from physical media bought online by 2007, a new report from In-Stat concludes.

Healthy growth in the online music market will continue for the rest of the decade, with worldwide sales growing from $1.5 million in 2005 to $10.7 million in 2010, reports In-Stat. Additionally, In-Stat expects that revenue from downloaded music will outpace revenue from physical media bought online by 2007. This is evidence 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, the high-tech market research firm says.

"Consumers are clearly opting for legal ways to purchase music, and more legitimate music sites are available," said Stephanie Guza, In-Stat analyst. "But vendors still face significant obstacles including Internet piracy, interoperability concerns and the unlicensed use of digital streams."

Here are some of the conclusions:

Nearly half of the survey respondents admitted to downloading music from the Internet, and 64% of these respondents have paid for the music.

The largest percentage of respondents who have purchased music online spent between $10 and $20 in the last 12 months.

The most popular site used was iTunes, with 53% of music purchasers having used the site.

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