- Roxio's Napster and Apple's iTunes Primary Beneficiaries -
MINNEAPOLIS, Oct. 9 /PRNewswire-FirstCall/ -- Due to the crackdown on
file-sharing networks by the Recording Industry Association of America (RIAA),
the proliferation of high-speed Internet and the continued growth of consumer
CD and DVD burning, U.S. Bancorp Piper Jaffray Senior Research Analyst Gene
Munster believes that a significant portion of U.S. music sales will move
online over the next several years. He expects the online music market to be
approximately $240 million by 2006. In a new report released today entitled
Stairway to Heaven or Highway to Hell: Picking Winners in the Online Music
Market, Munster examines the players that are looking to take advantage of
this shift in consumer behavior. He expects the competition to be intense and
believes two or three leaders will emerge.
"We expect that over time 'illegitimate' file-sharing networks will see
declining traffic due to record label lawsuits," said Munster. "It is our
belief that the online music market is currently at an inflection point; we
expect that the launch of several user-friendly music download sites will
increase consumer awareness over the next several quarters. While we do expect
a large competitive field by 2004, we believe that the primary beneficiaries
of growth in this market will be Apple Computer Inc. (AAPL, not rated, $23.06,
#) with iTunes and Roxio Inc. (ROXI, Strong Buy, $10.98, #>=) with Napster."
In addition, Munster believes that each major record label will partner
with many different sites to have the broadest distribution possible. Other
major players Munster expects to have an impact on the market include: Dell
Inc. (DELL, Outperform, $34.74, #=), which announced that the Dell Music Store
will open by the end of 2003; AOL Time Warner Inc. (AOL, not rated, $15.21),
which is currently a distribution partner of MusicNet; Amazon.com, Inc. (AMZN,
Market Perform, $55.70, #>); Microsoft Corporation (MSFT, Outperform, $28.82,
#>=), which launched the MSN Music Club in the United Kingdom in August; and
Yahoo! Inc. (YHOO, Strong Buy, $38.79, #>=), which has Launch online radio and
partners with PressPlay for downloads.
The report also includes the results of Munster's recently published U.S.
Bancorp Piper Jaffray Online Music Survey, a survey of 200 consumers that
explores the power of various online music brands and the willingness of
consumers to try this new distribution model. According to the results,
several brands have already gained strong awareness in the marketplace. While
awareness of Rhapsody and iTunes is still relatively small (15 percent and 30
percent, respectively), Napster had 92.5 percent brand awareness within
Munster's survey sample.
To receive a copy of Stairway to Heaven or Highway to Hell: Picking
Winners in the Online Music Market or the U.S. Bancorp Piper Jaffray Online
Music Survey, clients and members of the media should contact Dana Wade at
firstname.lastname@example.org or 415-277-1556.
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