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Online music pumps up the volume

Despite the legal woes surrounding online music, researchers estimate the industry will become a $9.7 billion business worldwide by 2006.

More than half of the world's young adult Web surfers have downloaded tunes, despite the legal dilemmas surrounding digital music, according to a study released Tuesday.

International research firm Ipsos-Reid found that 61 percent of Internet users aged 18 to 24 in 30 countries had downloaded music from the Web by the end of 2000, compared with 53 percent a year earlier. Ipsos-Reid said the study, based on 7,688 Internet users worldwide, includes both free and paid music downloads.

Although the vast majority of downloads have been free to date, the record industry has been making efforts to convert online music fans to paid services. Last month, record labels Warner Music Group, EMI Recorded Music and BMG Entertainment joined with streaming media company RealNetworks to develop a music subscription service for their new company, dubbed MusicNet. MTVi Group and infrastructure company RioPort also teamed to offer paid song downloads through MTVi's Web sites.

Chances for converting free music downloaders to paid services are high, according to a second global report released this week, which predicts online music sales will hit $9.7 billion by 2006, nearly 21 percent of the total music market.

The study, released Tuesday by Informa Media Group, said that with record labels in the process of developing subscription-based models to generate income, subscriptions likely will account for nearly 24 percent of online music sales worldwide by 2006. The study estimates total global music sales, online and off, will increase 26 percent to $46.5 billion.

The research firm also expects North America to lead online music sales with a 54 percent share of the global market by 2006. Europe and Asia-Pacific will follow with nearly 25 percent and about 18 percent, respectively, according to the study.

"It's really becoming very obvious that the Internet should be changing how people view the whole distribution model for music and other kinds of content," said Gus Schattenberg, vice president of global research at Vancouver, British Columbia-based Ipsos-Reid. "The study shows that without a doubt the digital cat is out of the bag."

Baby boomers and older Web surfers are also joining in the ranks of online music enthusiasts, according to Ipsos-Reid, with 29 percent of Internet users aged 35 to 54 downloading music; 16 percent of Web surfers over age 55 also downloaded music last year.

The study also found that 70 percent of males aged 18 to 24 downloaded music, compared with 48 percent of females.

In addition, the study found that downloaders in Canada and Taiwan led the global pack, with 76 percent of Internet users between the ages of 18 and 24 in those countries downloading music files from the Internet. Hong Kong and Sweden followed with 75 percent each, South Korea with 74 percent, and the United States and Argentina with 73 percent each.

"We really are witnessing the dawn of the global music bazaar," said Matt Kleinschmit, senior research manager for Ipsos-Reid. "In a few years we're going to be seeing people from anywhere in the world acquiring music online from anywhere in the world--sort of a musical ubiquity."