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Digital Music Delivery Exploding

20 Jan, 2005 By: Melinda Saccone

The market for digital music delivery is exploding, with consumer purchases of portable MP3 players and digital music downloads reaching record levels in 2004.

Sales of portable MP3 players nearly tripled from 2003 to $1.2 billion in 2004, putting more than 6.9 million players into the hands of consumers, according to the Consumer Electronics Association.

Meanwhile, consumers bought 140.9 million digital tracks in 2004, according to Nielsen SoundScan data. Paid downloads in the last half of the year grew an astounding 376 percent from the comparable six-month period in 2003.

While many are paying for digital music downloads, many are not.

Despite recording industry lawsuits, unauthorized music downloads continue to grow. In November 2004, peer-to-peer file-sharing use had more than doubled from a year ago, with more than 5 million consumers logged on to unauthorized networks, according to BigChampagne, which tracks both legal and illegal digital delivery.

Nearly 30 percent of all households have downloaded digital music for free, while 9 percent of consumer households said they had purchased digital music, according to Home Media Research's 2004 Consumer Study. The study surveyed 600 DVD households in the first quarter of 2004.

So just who's pulling free tunes off the Web?

The most active procurer of unauthorized music downloads are teens and the twentysomethings who grew up on Napster. This “now” generation, or “on-demand” demographic, has grown up having instant access to what they want, when they want it.

More than 40 percent of this demographic has downloaded free music — nearly double that of the general population — according to Home Media Research's 2004 Consumer Study. Teens were much less likely to have purchased a digital download than their older counterparts. Just 7 percent of teens had bought a digital download, compared to 13 percent of consumers between the ages of 20 and 50, according to the study.

The most active DVD renters were also some of the most active music downloaders. Consumers who rent discs at least once a week were much more likely to have downloaded digital tracks than the overall population, the study found. More than two-thirds (37 percent) of this group said they had downloaded music for free, while 10 percent said they had purchased digital tracks. High-volume DVD renters (who rent six or more DVDs a month) were the most likely to have purchased a digital track, with 17 percent saying they had done so.

Income played a decided role in downloading. Consumers earning more than $100,000 annually were nearly twice as likely to have purchased a digital track than the overall population, but they also were among the heaviest downloaders of free music.

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