More Research Heralding the Booming Online Music Age

According to a recent report released by Information Technology researchers Frost & Sullivan, the world Internet audio market generated revenues totaling $42 million in 1998, which dwarfs the 1997 revenues by 1516%. The report predicts that this market will continue growing at a healthy rate, achieving an increase into the triple percentage digits by the end of 1999.

The report indicates that the primary drivers behind the popularity of this "booming market" include the flexibility that it gives users to compile the music they prefer, its accessibility through the Internet, and the ability of unsigned artists to publish their music over the Internet, thus attracting a worldwide audience. The report notes, however, that there are some restraints that market participants must address: the proliferation of illegal distribution, which limits the availability of some mainstream content; the availability of numerous formats, which leads to end-user confusion; and the high cost of ownership, which will lead to lower usage.

In 1998, Frost and Sullivan identified only 22 active participants in the world Internet audio industry. In 1999, the company finds more than twice that number putting down roots, and that large multinational corporations are expected to release Internet audio distribution products with the marketing and distribution resources to make a competitive impact in the Internet audio industry. As a result, Frost and Sullivan believe that smaller market participants will need to form alliances with retailers and other technology companies in order to remain competitive.

Frost & Sullivan Analyst Generosa Litton states that "major record companies and technology firms have now seen the window of opportunity for the distribution of music and other audio files. With the further development of current technologies, the world Internet audio market is poised for tremendous growth throughout 2005."

Frost & Sullivan has also released its latest Market Engineering Awards to companies it feels have made a positive contribution to the Internet audio market. The 1998 Market Engineering Product Innovation Award goes to MusicMatch Inc. for "providing superior quality and an excellent performance record with its completely integrated software program that allows users to customize their files into personal playlists and play them on their PCs."

The 1998 Market Engineering Competitive Strategy Award goes to RealNetworks, Inc. for "creating a line of complementary products that allows PC and digital media users to send and receive media over the Internet and corporate Intranets. With its 60 million user-installed base to the market, RealNetworks is in a position to make an impact within the Internet audio industry."

The 1999 Market Engineering Marketing Strategy Award goes to Diamond Multimedia Systems Inc. for its "aggressive marketing and distribution campaign to a targeted customer base, which has made their product highly successful."

The 1999 Market Engineering Entrepreneurial Company Award is presented to for "providing artists with another avenue that introduces their music to a wider audience base, other than that of traditional record companies."

And finally, the 1999 Market Engineering Product Quality Award goes to Liquid Audio Inc. for being "the first company to provide a complete product line that allows music industry participants to promote and market their own music over the Internet. Liquid Audio has integrated with various e-commerce and database systems, and it also complies with rights reporting management systems."