The Online Music Market: Own vs. Rent ~ Will Consumers Buy Into It?

SUMMARY

The online music market has come a long way in the past few years. More than 200 sites offering digital downloads are now available. While Peer-2-Peer (P2P) and piracy issues have not entirely disappeared, consumers are showing heightened awareness and interest in legitimate online music services. Today's online music services offer users the ability to pay per download, buy a monthly subscription, or a combination of both. However, companies involved in the market may not all have music sales as their primary goal. With increased competition between sites this year, differentiation will be key. Services hope that creating interesting ways for users to discover music will help increase interest in new music, as well as the bottom line. The report reviews business models and trends in the industry, as well as market drivers and challenges. The report also includes results and analysis of an online survey about the online music market and forecasts worldwide revenues for the industry.

TABLE OF CONTENTS

• Executive Summary
• Methodology
• Introduction
  • Who is Involved in This Market?
  • Some Music Industry Statistics
• Online Services and Content
  • Business and Revenue Models
  • Types of Services
    • Stand alone
      • Napster
      • RealNetworks
    • Those using online music to further other business interests
      • Wal-Mart
      • Microsoft
      • Yahoo
      • Apple
      • Sony
      • Services Bundled with Carrier/Operator
  • Market Drivers
    • Broadband
    • Availability of Services and Compelling Content
    • Consumer Awareness
    • Installed base of MP3 Players
    • Mobile Phone Industry
  • Industry Challenges
    • Differentiation
    • Compatibility of Formats & Ease of Use
    • Piracy
  • Consumer Perspective: Technology Adoption Panel (TAP) Survey Results and Analysis
    • Primary Method of Connecting to the Internet at Home
      • Do You Have a Home Network (Either Wired or Wireless)?
    • Have You Downloaded Music from the Internet?
      • Have you paid for it?
      • Who are the people who have?
    • What Music Service Have You Used Most Often to Purchase Music in the Last 12 Months?
      • Ease of Setting Up an account
      • Ease of Check Out
      • Ease of Finding What You Wanted on the Site?
      • Would You Use This Service Again?
    • What Type of Music did You Purchase Online?
      • Approximately How Much Did You Spend on Online Music in the Past 12 Months?
    • What Type of things are you interested in finding in an online store?
      • Rate the importance of the following criteria when choosing an online service
      • When you shop for music online, which of the following best illustrates your typical behavior?
      • Which of the following is of most interest to you in an online music store?
    • Which, if any, of the following do you do with the music after downloading it?
    • Which, if any, of the following devices do you own?
      • Is the MP3 player the first one you have owned?
      • What type of MP3 player(s) do you own?
      • What brand(s) of MP3 player do you own?
    • Are you planning to buy an MP3 player in the next 12 months?
      • What type of player are you most likely to buy?
      • What brand of player are you most likely to buy?
    • Would you prefer to listen to your digital music on your mobile phone or an MP3 player?
• Review of Service Providers
  • North and Latin America
  • Europe
  • Asia Pacific
  • Music Forecasts
    • Worldwide Total Market and Online Revenues
    • Physical Products vs. Downloads/Subscriptions
    • Regional
• Concluding Thoughts

List of Tables

• Table 1. Statistics of Who Has Paid For Downloaded Music (N=181)
• Table 2. What Music Service Have You Used Most Often to Purchase Music in the Last 12 Months? (N=181)
• Table 3. More Information of Respondents in Each Price Segment
• Table 4. What brand of player are you most likely to buy? (N=219)
• Table 5. Online Music Stores of North and Latin America
• Table 6. Online Music Stores of Europe
• Table 7. Online Music Stores of Europe (cont'd)
• Table 8. Online Music Stores of Europe (cont'd)
• Table 9. Online Music Stores of Asia Pacific
• Table 10. Total Worldwide Music Market vs. Total Online Music Market: 2004-2009 (US$ in Millions)
• Table 11. Physical Products vs. Downloads/Subscriptions: 2004-2009 (US$ in Millions)
• Table 12. Regional Distribution of Online Music Revenues: 2004-2009 (US$ in Millions)

List of Figures

• Figure 1. Worldwide Online Market Revenues (US$ in Millions)
• Figure 2. Worldwide Broadband Subscribers (Units in Thousands)
• Figure 3. Age of Respondents (N=782)
• Figure 4. Survey Respondent Household Income (N=782)
• Figure 5. Primary Method of Connecting to the Internet at Home? (N=782)
• Figure 6. Do You Have a Home Network? (N=782)
• Figure 7. Have You Downloaded Music from the Internet? (N=782)
• Figure 8. Ease of Setting Up an account? (N=181)
• Figure 9. Ease of Check Out (N=181)
• Figure 10. Ease of Finding What You Wanted on the Site? (N=181)
• Figure 11. What Type of Music did You Purchase Online? (N=181)
• Figure 12. Approximately How Much Did You Spend on Online Music in the Past 12 Months? (N=181)
• Figure 13. What Type of things are you interested in finding in an online store? (N=181)
• Figure 14. Importance of Given Criteria When Choosing Online Music Site (1 ="Not at all important" and 5 ="Extremely important") (N=181)
• Figure 15. When you shop for music online, which of the following best illustrates your typical behavior? (N=181)
• Figure 16. Which of the following is of most interest to you in an online music store? (N=181)
• Figure 17. Which, if any, of the following do you do with the music after downloading it? (N=181)
• Figure 18. Which, if any, of the following devices do you own? (N=782)
• Figure 19. Is the MP3 player the first one you have owned? (N=273)
• Figure 20. What type of MP3 player(s) do you own? (N=273)
• Figure 21. What brand(s) of MP3 player do you own? (N=273)
• Figure 22. Are you planning to buy an MP3 player in the next 12 months? (N=782)
• Figure 23. What type of player are you most likely to buy? (N=219)
• Figure 24. Would you prefer to listen to your digital music on your mobile phone or an MP3 player? (N=252)
• Figure 25. Total Worldwide Music Market vs. Total Online Music Market: 2004-2009 (US$ in Millions)
• Figure 26. Regional Distribution of Online Music Revenues: 2004-2009 (US$ in Millions)