Online music makes sound progress in Europe

6 Mar 2006

European internet users spent €192m on digital music last year, although this format won’t kill off the CD any time soon as it represents just 2.2pc of the total music market. Irish consumers spent €1m, which was 0.9pc of the total music market here.

According to a forecast from JupiterResearch, the digital music market in Europe will be worth €1.6bn by 2011. Even at that it will account for no more than 16.3pc of all recorded music sales, the analyst firm said.

This growth follows years of underperformance, JupiterResearch said. Previous obstacles such as weak consumer demand, low broadband penetration and poor availability of music catalogues had dogged progress but most of these issues have been addressed.

JupiterResearch polled users in 17 countries and found that 5pc of people online bought digital music in 2005. The total spending of €192m last year shows massive growth of 267pc from 2004, when €52.3m was spent on digital music.

Mark Mulligan, senior analyst with JupiterResearch, told that 60,000 Irish internet users bought digital music in 2005, representing 3.4pc of the total online population. This year Irish online music revenues are forecast to more than double, reaching €2.2m or 1.8pc of total music spending in Europe.

By those estimates it appears that Irish music buyers will continue to spend less on digital music compared with CDs relative to the European average, where online will account for 2.2pc of total music sales.

Unsurprisingly Apple’s iTunes music service was the market leader as a source for music buyers but the research found that local services performed well, such as MusicLoad, a Deutsche Telekom service for German consumers. The UK was the single largest market for online music last year, with 29pc of all spending there.

Mulligan said that although digital music finally got off the ground in Europe last year it was important put this into perspective. “Paying for digital music is currently a niche activity and is still outweighed by file sharing which is conducted by 15pc of European internet users,” he pointed out.

“The momentum is with the paid services and although the a la carte download model used by Apple will continue to lead 2006 will be a key year for European digital music subscriptions, driven by sustained growth of Napster, Virgin and HMV, as well as anticipated launches of other major services such as Rhapsody and Yahoo! Music,” Mulligan added.

By Gordon Smith