Study sees digital music shakeout


LONDON -- The digital music business should expect a spate of consolidation during 2008 and 2009, according to a new report.

London-based research firm Point Topic said that, in a global sector that has more than 498 digital-download services operating in more than 40 markets, digital music services with robust business models are expected to survive by being acquired by the major digital music players while the weak ones collapse.

Among the major digital music companies Point Topic said are expected to embark on an acquisition spree are Nokia, Microsoft and RealNetworks, operator of U.S.-based subscription-funded service Rhapsody.

"There are too many online and mobile shops around," Point Topic analyst Oliver Johnson said.

Point Topic calculates that legal digital sales now account for nearly 30% of the total U.S. music market and for about 20% of the business in Europe. In total, it estimates that digital music generated $2.9 billion in revenue in 2007, a 40% jump from 2006.

Apple's iTunes Music Store continues to dominate the digital music sector in the U.S., U.K., France and Germany. However, according to Point Topic, iTunes is outperformed by mobile-music operators in Japan.

The research firm's analysis also concludes that the growth in mobile carriers' bandwidth will boost sales via 3G (third-generation) high-speed services. Point Topic added: "Global 3G sales are starting to increase sharply, up more than 50% in 2007, and mobile subscriptions are still growing, up more than 20%."