Online media services such as Apple's iTunes Music Store are set to generate nearly $7 billion in revenues by 2008, analysts predict.

Digital Tech Consulting's (DTC) new report 'Online Media Services: Forecasts, Business Models and Analysis' shows that exponential growth, driven by a variety of new revenue streams, including premium subscription and per-unit content sales will drive the industry.

DTC senior analyst Antonette Goroch said: "With more than 90 million broadband Internet subscribers worldwide, theevolution of digital rights management and more clearly defined legal boundaries, a fertile market is beginning to take root".

Revenues from online music and movies totalled just $250 million in 2003, the report claims. The analysts also predict that online media sales over the next five years will be dominated by per-unit content sales, such as iTunes' à la carte model.

The picture is different when it comes to video and movie content, with subscription sales making up the majority for the next several years," said Goroch.

"Streaming-based video subscriptions are the norm with content primarily repurposed from broadcast TV. Movies are predominately distributed through a per-unit sales model, but make a small percentage of both users and revenues due to immature services with limited catalogues."