Bum note for online music sales

NEWS Online music sales are expected to be weaker than predicted because of overall sluggishness in the industry and lacklustre digital services, according to Jupiter Research. But the research firm still expects Net music sales to grow to $3.3bn in 2008 from less than $1bn in 2003. Jupiter said it expects Internet sales to account for just over a quarter of US music spending by 2008. Sales of CDs through online stores will remain flat in 2003 at about $750m, according to the study. Lee Black, Jupiter analyst, said in a statement: "The industry is suffering from competition for entertainment dollars, changing demographics, the end of the CD upgrade cycle, and piracy." Services such as Apple Computer's iTunes and BuyMusic - launched last week by Scott Blum, the founder of Internet retailer Buy.com - have created some new buzz for digital download services by offering songs from major labels and independent recording companies. However, Black said: "While Apple has rekindled interest in digital downloads, total digital sales - downloads and subscriptions - will not surpass $80m this year." Jupiter has repeatedly lowered its online music forecast over the past few years, each time citing an under-performing market and the failure of digital music services to meet consumer expectations. Last year, the research firm projected that the online music market would grow to $5.1bn in 2007, a downward revision from the $5.5bn it expected in 2006. Legal issues are proving to be a stumbling block for online music services. The recording industry last month said it would step up its efforts to crack down on individual file-swappers who illegally trade songs online. BuyMusic's Blum last week said his goal is to have one million downloads a day by the end of the year. In contrast, Apple's iTunes service soared when it was launched in April, selling five million songs in the first eight weeks of operation. The picture for Europe is no better, according to Jupiter Research, but analyst Mark Mulligan said in a statement that EMI's decision to make most of its catalogue available online is evidence things are beginning to change. He said: "Europe's online music market has been stuck in the starting blocks for the last few years, but the tide is finally beginning to turn."