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Friday, July 01, 2005

Hearing the Boom Through Headphones

Hearing the Boom Through Headphones
Published: June 29, 2005
(After July 07, 2005, this article will only be available to eStat Database subscribers.)

Digital music player revenue nearly tripled in 2004, reaching $4.5 billion, according to In-Stat.

In-Stat predicts that the number of hard disk and flash-based digital music players will almost quadruple between 2004 and 2009, rising from 27.8 million to 104 million units.

One-quarter of US consumers own digital audios players, up from 16% in 2001, In-Stat says. Although a number of competing devices, including Rio, iRiver and Creative, have emerged to challenge the popular iPod, Apple commands 30.2% of the worldwide digital audio player market.

Yankee Group also expects digital audio players to grow sharply in the coming years, but at a slower pace than projected by In-Stat. Yankee Group says the installed base of digital audio players in the US stood at 35.1 million in 2004, and will reach 41.6 million in 2005. By 2009, it projects that there will be 67.7 million digital music players in the US, almost twice as many as in 2004.

A recently released report from the NPD Group indicates that digital music players are leading some consumers to online music services. NPD found that 22% of US online consumers who had begun using music downloading services did so because they recently had purchased a digital audio player.

The percentage of US households using such services has expanded considerably since the beginning of 2004. Only 0.5% of US households used them in December 2003, while fully 4% of households used the services by March 2005. However, P2P file-sharing has proved consistently more popular than legal services, with around 8% to 10% of households using them throughout 2004 and 2005. By March 2005, 9.6% of households used P2P services.

Will legal music downloading ever be as popular as P2P services? eMarketer Senior Analyst Ben Macklin finds that changes in the market have made such a shift more probable: "With the recent launch of Yahoo!'s Music Unlimited service combined with the well established iTunes, Napster 2.0 and Real Network's music service, Internet users now have a genuinely compelling array of paid online music services that can compete with P2P networks."

eMarketer's report on online music will be released in July. Sign up to receive an e-mail notification when it is available.


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