New figures released by In-Stat, imply that the online music market will continue to grow vigorously for the rest of the decade. Worldwide online music sales are projected to swell from $1.5 billion in 2005 to $10.7 billion in 2010.

"Consumers are opting for legal ways to purchase music, and more legitimate music sites are available," said Stephanie Guza, an In-Stat analyst.

In a clear indication of the profound shifts occurring in the music industry, the In-Stat report, The Online Music Market: Downloaded Music Outpaces Physical Media Bought Online in 2007, predicts that revenues from downloaded music will outpace revenues from online purchases of physical media by 2007.

Buying music in digital form over the Internet is set to become the key purchasing pattern for many consumers. This shift will be given more impetus by the continued evolution of Apple’s iPod and iTunes offerings, along with other MP3 players and related online music stores, as well as the ongoing transformation of the mobile phone into an Internet-connected portable music device.

In-Stat’s survey findings included:

  • Nearly half the survey respondents had downloaded music from the Internet
  • 64% of these respondents have paid for the music
  • The largest percentage of respondents who have purchased music online spent between $10 and $20 (in the last 12 months)
  • The most popular site was iTunes, with 53% of music purchasers using it
On a down note in an otherwise upbeat report, Ms. Guza cautioned, "Vendors still face significant obstacles including Internet piracy, interoperability concerns and the unlicensed use of digital streams."

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