Jupiter: Subscriptions to Drive Net Music

NEW YORK (07/24/2000) - Even though the major music labels have not yet jumped wholeheartedly into Internet music distribution, online-related U.S. music sales will grow to be a US$5.4 billion business by 2005, according to a study released by market researcher Jupiter Communications Inc. Monday at its Plug.In industry conference.

Of the $5.4 billion total, most music will be ordered online and delivered physically, but 28 percent, or around $1.5 billion in music sales, will be delivered by download, Jupiter said.

Most significantly, $980 million of the music actually delivered online in 2005 will stem from subscription services, as opposed to $531 million, which will stem from "a la carte" downloads, the market research firm said.

Meanwhile, the percentage of the total U.S. music market that will be online will grow from 5.5 percent in 2000 to 24.6 percent in 2005, Jupiter forecast.

For consumers, subscription services offer file-quality assurance and virus protection, according to Jupiter analyst Aram Sinnreich, speaking here Monday.

For music labels, subscription services afford the opportunity to collect data about customers and the ability to use that data to fine-tune their product offerings.

Though it will be a challenge to woo consumers away from free services such as Napster Inc.'s Web site, which lets music fans swap song files for free, the quality assurance aspects of subscription services should be able to do the trick, according to Sinnreich.

Some industry insiders here expressed some hesitation about the subscription model.

"Subscription services would represent a paradigm shift for consumers -- it's just not the way they buy music now," said Jim Long, chief executive officer of RioPort Inc., a music software and services company. "But five years is far away enough so that anything could happen."

EMusic.com Inc., however, Monday launched a subscription service for music available on its Web site. For $9.99 per month, consumers can sign up and download as much of EMusic's online catalog of 125,000 songs as they want through the site's new EMusic Unlimited subscription service. The service will use open, unencrypted MP3 files.

Jupiter Communications, based in New York, can be reached at +1-212-780-6060 or at http://www.jup.com/.

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