MP3 Players Reaching 'Critical Mass'

The number of MP3 players sold this year is expected to reach a level that's sufficient to drive demand for online music services and stores, a market research firm said Wednesday.

U.S. shipments of MP3 players are expected to increase 35 percent this year to 18.2 million, and maintain an annual growth rate of more than 10 percent through 2010, JupiterResearch, a division of Jupitermedia Corp., said. At the end of the decade, the MP3 market is expected to have an installed base of 56.1 million units, up from 16.2 million in 2004.

"Historically, any new device or medium that reaches a U.S. household penetration of 15 percent to 20 percent creates a critical mass of customers for other products and services," JupiterResearch analyst David Card said in a statement. "MP3 players will hit that mark this year.

"This is good news for both digital download stores and subscription music services. Subscription services and devices will fuel each other's growth."

Apple Computer Inc.'s popular iPod is expected to dominate MP3 player growth over the "medium term," the research firm said.

In related news, the worldwide online music market is expected to increase 134 percent this year, reaching $1 billion for the first time, according to market researcher In-Stat.