LOS ANGELES,Jupiter Media Metrix Monday cut its five-year forecast for the size of the online music market by 11.3 percent, citing weakness in the economy and music sales and later-than-expected Web service launches.
In data due to be officially released Tuesday, Jupiter, an Internet research firm, said it had reduced its 2006 estimate of the size of the Web-based music market to $5.5 billion from its original forecast of $6.2 billion, announced in July.
The forecast represents a jump from an estimated $900 million in online revenues in 2001.
Of the $5.5 billion pegged for 2006, about $1.6 billion would come from subscriptions and one-off payments for downloads, with $1.0 billion coming from subscriptions alone, Jupiter said.
The rest would come from sales of physical CDs through online sites and services, Jupiter said.
Jupiter in July had forecast the online subscription and download portion to total $1.9 billion.
“It’s not a drastic reduction. It’s more of a ratcheting down commensurate with the total malaise hitting the market,” said Jupiter senior analyst Aram Sinnreich.
Sinnreich said at the time of the July forecast, Jupiter had been anticipating a summer/fall 2001 launch of two big subscription services developed by the major music companies, known as MusicNet and Pressplay.
These services, however, were not launched until December.
Both Pressplay and MusicNet were developed to capitalize on the millions of fans who flocked to Napster before an industry-wide copyright lawsuit shut the popular song-swap service down in July.