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Digital Music Will Renew Global Market Growth

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

In 2006 the major mobile handset manufacturers (Nokia, Motorola, Sony Ericsson, LG and others) have been shipping MP3 enabled handsets in some volumes. 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 (Vodafone, Sprint Nextel, T-Mobile, Cingular, DoCoMo, SKT, O2, Orange and many more) thus creating a new digital consumption market.

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

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 world wide.

In November 2006, Microsoft launched its rival digital music player -- the Zune. Sales so far have not been outstanding, but this signifies a major move by a very major player, and this 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 out to consumers 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 $560m in 2005. However, this looked positively cheap compared to the $1.65bn 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 huge 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, these players are positioned to build themselves presence in the digital music market over the next five years.

No doubt there will be winners and losers in this battle, but Portio says that the overall effect of the interest of so many major global corporations will be renewed market growth.

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