NEW YORK -- In fretting over online music piracy, the music industry may could lose out on online music marketing.
That's the conclusion of a report released Monday by Jupiter Communications kicking off its fourth annual Plug.In digital music conference.
"Industry players have been so eager to dampen any momentum MP3 had as a format that the great benefits of digital distribution -- including use of MP3 -- remain vastly underexploited," said Jupiter analyst Mark Mooradian in a statement.
Start using the Net, and stop fighting it, Jupiter admonished the industry.
Labels need to begin using the Web to learn about bands' audiences and build new business models with direct marketing, the report said. Sale of current recording media will increasingly depend on it, Jupiter said.
By 2003, online sales of traditional CDs, tapes, and records will account for $2.6 billion, amounting to 14 percent of the total US retail music market. Today online music sales represented roughly 1.1 percent of the $13.7 billion music sales.
To build this sales channel, music industry players must get less defensive, and use digital distribution as a tool to market and sell music on traditional media.
Revenue from actual digital distribution of music will reach just $147 million by 2003. The next five years will serve only as a prelude to mass-market acceptance of digital distribution, Jupiter said. br>
