Record industry will come round to digital downloads

Online music sales could account for nearly 15 per cent of the total market by 2003, revolutionising the music industry - but only if concerns about security and piracy are met.

That's the view of Iain Clark, managing director of Mode, an ecommerce company that has just partnered with music database supplier Muze to create a European online music service for record companies.

In the short term the two companies expect to supply most of its record company clients with an online mail order service. But within 10 years music douwnloads will account for more of the music market than CD sales.

"Record labels see online retailing as a good way to claw back margins that have been squeezed by the power of the large retail chains like HMV and Our Price," said Clark.

It the lure of improved profitability which is beginning to overcome music industry worries about online music piracy, which has grown enormously with the popularity of MP3 sites on the Internet. MP3 is a way of downloading highly compressed music over the Internet.

Clark believes that more modern compression technologies like Lucent's ePAC software, which not only provides superior audio quality and built-in anti-piracy features, will ultimately overcome industry resistance.

One problem for European record labels is copyright legislation, which is different in each country. David Bowie's launch last month of his new record on his own Web site was marred by the fact that non US citizens were not permitted to download any tracks, due to copyright restrictions.

The last barrier to downloadable music going mainstream is the lack of an easy way to replay it other than on a PC.

"People downloading music don't want to have to know which file format it is compressed in and which players work with which audio 'CODECs'," he said.