Digital music sales reach crescendo

Record company revenues from digital sales reached $2.9bn in 2007

Digital music sales account for nearly 30 per cent of the total music market in the US and around 20 per cent in Europe, according to the latest update from Point Topic.

Record company revenues from digital sales are estimated at around $2.9bn in 2007, up 40 per cent on 2006.

"This is roughly split half and half between online and mobile sales," said John Bosnell, senior analyst at Point Topic.

Estimates suggest that there were around 1.7 billion single music tracks legally downloaded in 2007, an increase of 53 per cent on 2006.

Apple dominates the download and hardware markets, while the rest is shared among suppliers such as Napster, Rhapsody, Microsoft's Zune and an increasing number of mobile operators.

Point Topic estimated that there are 498 online services offering track downloads in over 40 countries.

"The consolidation of the digital music market is inevitable. There are still hundreds of online music suppliers worldwide, and 300 in Europe alone," added Bosnell. "2008 and 2009 will see buyouts for some and bankruptcy for others."

Apple's iTunes service sold around two billion songs between January 2007 and January 2008 raising its revenue from track sales in the past year to $1.9bn.

Point Topic noted that Apple's results for the first quarter of 2008 are the strongest to date.

However, nearly all Apple's profit derives from selling the hardware and there are indications that even iPods are starting to be left on the shelf.

Bosnell believes that Apple is "well aware" of these issues and continues to expand its content offerings and partnerships.

The company's largest markets are the US, the UK, France and Germany. Despite a good start in Japan, Apple's revenue declined by 11 per cent in that country in 2007.