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Multi-Billion-Dollar Online Music Market

Broadband households in Europe and North America will re-shape the distribution of recorded music over the next five years, spending billions of dollars to download music from sources like Apple Computer's iTunes Music Store, RealNetworks's Rhapsody, Napster, Yahoo and a hoard of Internet service providers. According to a new report from Strategy Analytics, broadband users in these regions will spend over a billion dollars on online music this year, with sales expected to reach $4.5 billion by 2010.

This figure will represent nearly 16 percent of total sales, up from less than two percent in 2004. The report predicts that use of legal music services in Europe and North America will be driven by the rapid adoption of broadband Internet access as well as explosive sales of MP3 players and music-enabled mobile phones.

Despite the success that Apple has enjoyed selling individual songs for 99 cents each, by 2010 over 60 percent of online music revenues will come from subscription based services that give customers access to millions of songs for a fixed monthly fee.

"Telcos, cable operators and other broadband service providers will encourage adoption of subscription-based services, which produce steadier revenue streams and are more likely to deter customer churn," notes Martin Olausson, Senior Analyst for Strategy Analytics. "Subscription-based services will also be better positioned to maintain price points over time by adding portability and other advanced features."

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