Marketplace

T The global music market place is currently worth around $32 bn per year. 92% of this is dominated by the sale of physical product , predominantly CD and cassettes . Despite over 42m I-Pod sales in 2005 , the digital download market place still only makes up 6% of the total market. This sector . along with mobile music sales , is set to increase its market share to over 50 % by 2010 ., with the driving factors being broadband penetration, 3G network roll out, new content service offerings and a general user acceptance of digital and mobile downloads services.

There are approximately 200 music download services today, this is expected to grow as mobile operators deploy their music services and phones come increasingly equipped with I-Pod / MP3 player functionality.

Music Market Graph

Digital Music Year Zero (DMY0)

Year Zero is an internal definition we use. We define it as the time when music digital revenues exceed those of physical music revenues. We currently expect this to be in 2010/2011. We use DMY0 as a future focus point upon which we base many of our strategies, systems and processes. We believe it is important to plan for what the music industry will be like. This mentality is at times at odds with other parts of the record industry, who may have deeply vested interests in things remaining as they presently are.

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