Digital music shakeout looms; 355 online sellers reported

While Apple’s iTunes Music Store continues to dominate the legal digital music market, far ahead of a handful of competitors, the majority of online music sellers are struggling. There are some 355 digital music retailers, according to a report by the International Federation of the Phonographic Industry released last week, and most of them may be forced to shut down or consolidate.

“I don’t imagine all these services can last. Some will go out of business or be consolidated,” said Gabriel Levy, head of music in Europe for RealNetworks, home of the Rhapsody subscription service. Barney Wragg, senior vice president of Universal Music Group’s eLabs unit, shares the same view. “The market keeps growing, and there will be winners and losers,” said Wragg. “The fact that there are 355 retailers—are they all economically viable? Clearly the market is adjusting all the time.”

Because of its market leading position and pricing, many in the music industry are brazen in their wishes for a more powerful rival to iTunes. “It’s inconceivable that others wouldn’t come in (to challenge Apple),” said EMI Chairman Eric Nicoli. “To talk about dominance this early in the game is short-sighted. It’s not a five-year game, it’s a 30- or 40-year game.”

Latest News