Music industry executives must grit their teeth until 2005 as the business is unlikely to see a sales recovery before then, warns research analyst, the Informa Media Group.
The analysts predict that the retail value of global music sales will fall to $28.2 billion this year from $30.9 billion in 2002, falling again next year to $28 billion. It does not anticipate recovery before 2005, when it anticipates that Internet-based music retailing will begin to reach critical mass.
"The success of the new download services proves there is a viable market for legitimate digital sales," said Simon Dyson, an Informa analyst to Reuters.
The analysts condemn the labels for failing to act "decisively" enough to prevent digital piracy. It expects global Internet music sales to reach $3.9 billion by 2008.
The Wall Street Journal is today carrying a report that looks at the intensification of the competition in the emerging digital music industry.
Referring to Apple CEO Steve Jobs' recent statements that he does not understand how other services can make money, Roxio CEO Chris Gorog said: "I would say that perhaps he hasn't figured out a way to make money at it, but we have."
The report also looks at Apple's strategy to drive iPod sales with its service. "Competitors argue that Apple 's dependence on the iPod is treacherous," it writes, "Apple for now commands a premium for the device, but the iPod advantage may be short-lived, as competitors gradually improve their own music players."
It adds, "Apple has a long history of seeing its technical innovations copied by competitors".
MP3 players from Samsung, Dell, and Sony will ship soon, and digital music distribution services from Microsoft, Sony and Wal-Mart are scheduled to debut in the coming months.