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Global Market for Digital Music Consumption

Following six years of decline from a high of $39.7 billion in 2000 to just $32.1 billion in 2006, Portio Research believes that the value of the global music market is set to reverse and grow again back to $38.8 billion by 2011.

In 2006 the major mobile handset manufacturers (Nokia, Motorola, Sony Ericsson, LG and others) shipped MP3 enabled handsets in volume. At the same time, many mobile network operators (MNOs) have started to distribute MP3 enabled phones and launch OTA (over-the-air) music download services, thus creating a new global digital music consumption market.

Worldwide, the mobile services market dwarfs the music industry in revenue terms, and music companies need to be taking a very serious look at mobile operators as they may possibly become one of the biggest distribution channels to market in the near future.

In the portable digital music device market, Apple has continued to produce new models of its highly successful iPod, and while the iPod leads the market, alternative MP3 players have continued to proliferate worldwide.

In November 2006, Microsoft launched its rival digital music player -- Zune. Sales so far have not been outstanding, but this signifies a major move, and this event has brought further interest to the digital music player market. Portio expects to see in excess of 1 billion mobile handsets shipped worldwide in 2007, and almost half of these will be MP3-enabled.

With so many devices shipping, Portio also believes that the MP3 player market will soon be totally dominated by the mobile handset vendors. On the Internet, the growth of social networking sites has been astronomical, and two of the most interesting new sites where new artists could promote their songs and videos were bought by global brands.

Analysts could not initially understand why News Corporation bought MySpace for $560 million in 2005. However, this looked positively like a bargain compared to the $1.65 billion that Google paid for YouTube in October 2006.

Almost every major development in the global music industry in recent years has been with digital music. As many big brands have entered the market with significant technical experience and substantial marketing budgets, Portio describes the next few years as the "Clash of the Titans."

As these major brand names -- music companies, consumer electronics manufacturers, mobile network operators, mobile handset vendors and of course all manner of advertisers -- meet and compete in this growing market, Portio studied how these players are positioned to build their presence in the digital music market. Their resulting study report is entitled "Digital Music Futures 2007-2011."

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