In 2004, online music in the U.S. represents nearly a $1 billion business. Music purchased online, including CDs and vinyl, music downloads, and streaming audio subscriptions are expected to reach $963 million in 2004. Alongside the rise of digital cable television (on-demand programming), home theater systems, digital video recorders, and CD/DVD burners, the online music scene is rapidly evolving in terms of widespread consumer adoption.

As of spring 2004, an estimated 40% of Internet users (45 million American adults) paid for some form of online music in the past 30 days. The gamut of online music purchasing includes subscriptions to streaming audio services, music downloads such as iTunes, and physical media (CDs, vinyl) purchased online.

In 2004, online music in the U.S. represents nearly a $1 billion business. Music purchased online, including CDs and vinyl, music downloads, and streaming audio subscriptions are expected to reach $963 million in 2004. Alongside the rise of digital cable television (on-demand programming), home theater systems, digital video recorders, and CD/DVD burners, the online music scene is rapidly evolving in terms of widespread consumer adoption.

As of spring 2004, an estimated 40% of Internet users (45 million American adults) paid for some form of online music in the past 30 days. The gamut of online music purchasing includes subscriptions to streaming audio services, music downloads such as iTunes, and physical media (CDs, vinyl) purchased online.

On average, an estimated 67 million people in the U.S. visit a music-related website each month. Whether the object is physical music purchases, streaming audio, or music downloads, Americans are increasingly looking online for music. This report covers the online music market, with the persistent thread covering one key theme: consumers want to pay for music online, but only if it is convenient to do so.

For the purposes of this report, the following definition is used:

The Mintel online music market report includes sales of physical music products, such as compact discs, cassettes, and vinyl records purchased via the Internet in the U.S. Also are music downloads and subscriptions to digital music, commonly referred to as streaming media or streaming audio. The primary concentration of this report, however, is on music downloads, which represents the hyper-growth segment of the industry. The free, peer-to-peer based networks such as Kazaa and WinMX are referenced extensively throughout this report as they have impacted the online music business.

This report does not include sales of blank media, software, hardware, portable audio players (such as Rio or iPod), or other devices used for music playback or recording. Also excluded are music video sales, such as DVDs, streaming video, or VHS music. However, these products, services, and media types are referenced in this report to the extent that they affect the online music business.