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Online Music is EU Mass Market Phenomenon

According to Screen Digest, 2006 is the year that online music went truly mass market in Europe. Screen Digest expects that European consumer spending on online music will be greater than 280 million euros in 2006 more than double the 120.8 million euros spent in 2005. By 2010 consumer spending on online will generate more than 1.1 billion euros.

Over the next couple of years the increase in online spending will probably not be enough to hold back the decline in sales of recorded music. Screen Digest expects the total European music market to fall to 8.9 billion euros in 2006, down from 9.2 billion euros in 2005. However as sales from digital platforms (online and mobile phone) increase there is every reason to think that this decline will stall and in 2010 revenues will have recovered a little to just under 9 billion euros.

The European online music market is hardware driven and, at a pan-European level, dominated by Apple's iPod and iTunes Music Store (ITMS) combination. However there is considerable regional variation and Apple's position as the number one player and music store is by no means universal. What is universal is the European preference for 'a la carte' downloads as offered by the ITMS and T-Online's service Musicload rather than the subscription services from Napster and MusicNet.

Many of the key players in online music come from areas not traditionally associated with the music business and bring with them a set of priorities quite separate from a company that's principal focus is entertainment. The principal parties involved come from the following areas: technology companies; telcos and ISPs; specialist digital content services; retailers and e-tailers.

By far the most influential of these are the technology companies Apple and Microsoft who have turned to content as a way of pushing their lucrative hardware and software businesses, each using Digital Rights Management (DRM) systems to maintain the value of their respective propositions.

Moreover, forward-looking broadband service providers can apply these new market insights in practical ways. As an example, with consumer consumption trends pointing toward an increased desire for a la carte offerings, marketers must proactively free themselves from the confines of a product-centered "bundle" mentality.

Granted, there may always be a less-demanding segment of the consumer population that finds the un-customized product and service bundle to be 'good enough', but the current movement of more independent thinking -- and affluent -- consumers will continue to raise the bar of expectations. This transition is not a fad.

As always, the free-spirited service provider who dares to the leave the commodity herd will likely reap the rewards by discovering unexploited green pastures of new and abundant market opportunity.

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