Jon Iverson

According to a report released last week by Cahners In-Stat Group, a high-tech market research firm, the market for personal digital music players using audio compression technologies will experience a tremendous increase in growth through the next several years. Nearly $800 million in player sales are expected in 2003, spurred largely by widespread Internet access. The report also states that products in this segment will initially focus on downloading technologies like MP3, and over the next 12 months consumers should expect to see more features integrated into the players such as FM tuners, increased storage capacity, and security systems like Secure Digital Music Initiative (SDMI).

One would think that the Internet was growing crowded with online music retailers such as CDnow/N2K, Amazon.com, EveryCD, and Tower Records, just to name a few, all hustling CDs. But the lure of gold in them e-commerce hills is hard to resist. Last week, barnesandnoble.com jumped into the fray and announced the launch of its own Music Store, featuring what the company describes as the first "online classical music superstore." Notably late to market with its online bookselling franchise, barnesandnoble.com hopes to gain ground against arch-rival Amazon.com by expanding beyond books and better focusing on niche markets.

The Internet is beginning to pose quite a dilemma for high-end audio manufacturers, especially ones with limited distribution in major markets such as the US. Do you risk alienating potential bricks-and-mortar dealers in an effort to gain widespread exposure by offering your products online? Or do you slowly build distribution through the traditional stores that for years have been high-end audio's haven?

Earlier this month, DirecTV announced that it is investing $50 million in XM Satellite Radio in an effort to capitalize on direct satellite-to-receiver broadcasting technology, which is intended to provide listeners in the car and at home with up to 100 channels of music, news, and entertainment available in North America. Additional XM investors include General Motors, Clear Channel Communications, and a private investment group.