March 10, 2008

Digital sales of music represented 10% of the total worldwide music market in 2007, up from 6% in 2006, reports In-Stat. By 2012, digital music sales will represent an impressive 40% of all music purchased worldwide, the high-tech market research firm says. Factors contributing to this growth include the global expansion of broadband, continued demand for single-track downloads, and expanding music catalogues. Another key driver is the potential for market growth in full-track downloads to mobile handsets in markets other than Japan, which currently is the primary market for this type of digital music format.

“Digital piracy continues to represent the primary challenge to online music service providers,” says Stephanie Ethier, In-Stat analyst. “Other obstacles still include the lack of interoperability between services and devices due to differing digital rights management (DRM) technologies, and weak consumer demand for subscription-based services. Another potential market inhibitor is the fact that content owners, cellular service providers and handset manufacturers are increasing the amount of marketing and promotion for mobile music.”

Recent research by In-Stat found the following:

Sales for online digital music reached $3.05 billion in 2007, up 48% from 2006.

Revenue for worldwide full track mobile downloads will reach approximately $4.2 billion by 2012.

The majority of respondents who accessed online video (72.3%) in 2007 did not pay for the video they saw from the Internet.

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