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Market Analysis

Currently, the digital music market is a $700 million market that is quickly growing and expected to reach $4.6 billion by 2008. The majority of early adopters of digital music are those who are extremely interested in music and are technologically savvy. The largest demographic in the digital music market, and specifically the personalized recommendation market, is listeners between the ages of 18 and 25. However, with the proliferation of ITunes and IPods into the mainstream market, digital music is quickly becoming mainstream and the market is quickly expanding to encompass younger and older music listeners. 58% of those who have used any online music service have been exposed to a wider variety of music, showing the internet to be an effective medium for expanding the music knowledge and tastes of listeners.

Personalized music recommendation technology is the next step in digital music technology. Currently, one-tenth of early adopters "make purchases based on others' recommendations" and one-third of early adopters are "interested in online music discovery and recommendation technology that is actually powered by their taste in music." The most interested users are those who are the most active users of online music services. Since currently available services are relatively new and not well developed, there is much potential for growth in the personalized recommendation market. Gartner predicts that "by 2010, 25% of online music store transactions will be driven from consumer-to-consumer taste-sharing applications." Thus, personalized music recommendation is a dynamic market that has vast profit potential for the future.

Users are looking for flexibility in the ways in which they can access their digital music. 37% listen to music on their PC 1-4 hours per week, 36% listen to music in their home theater or living room 1-4 hours per week, and 33% listen to music in their car 1-4 hours per week. Technological integration is outside of the scope of this service; however, by providing services to both personal computers and portable devices (which currently can be connected to and used in conjunction with home and car theater systems), the proposed service can target these segments of the market.

Source: http://cyber.law.harvard.edu/home/uploads/511/11-ConsumerTasteSharing.pdf