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OD2 clocks up 1m downloads in Q1

Long, long way behind US players

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UK-based digital music distributor OD2 sold one million downloads through its European retail partners during the first three months of 2004, the company claimed yesterday.

That figure amounts to a 1000 per cent increase on the same period last year and a 100 per cent increase over Q4 2003, OD2 - short for On Demand Distribution - said.

The growth is certainly impressive, but the base figures are less so. OD2 offers downloads through 21 online retailers in nine European territories. Most of its downloads come through subscription-based packages. Last August, it announced its an a la carte download service, but this didn't kick off until Coca-Cola launched its OD2-fed music download store, MyCokeMusic.com, in January this year.

The big increase over Q4 2003 shows the impact of MyCokeMusic, and shows how more popular the pay-per-download model is over the old 'x tracks for y pounds per month' approach.

But OD2's progress pales before the 50 million songs downloaded from Apple's iTunes Music Store in the US during the store's first 11 months online. Even Napster managed five million downloads during its first three months of operating as a sing seller.

OD2 covers roughly the same population base as the US, and Europe lags behind the States in the degree to which its citizens download music from unlicensed P2P networks. Yet Europe - the UK in particular - consumes a significant portion of the world's musical output.

OD2 isn't Europe's only digital music distributor - DX3 operates a similar subscription-based system too - but like its rival, its focus on distribution leaves it at the mercy of those of its retail partners who promote their offerings and the concept of legal downloads to the public. Certainly, few have done so to the extent that Apple and Napster have, and that shows in the relative download stats.

The arrival of these companies in the UK and Europe will raise the profile of downloading as a whole, but consumers coming to the download sites for the first time are more likely to opt for the better known ones: Napster through its P2P notoriety and Apple because of the success of the iPod. Both use their own distribution systems.

Virgin, which currently uses OD2 to provide downloads, will shortly be relaunching its service as Virgin Digital, though this is backed by US-based OD2 rival, MusicNet, which this week opened a UK/European office.

The privately-held OD2 also said its total turnover for the first quarter was £1m ($1.84 million), with proceeds from downloads and licensing fees. If it wants to increase that it had better persuade HMV, Freeserve/Wanadoo, Tiscali, MTV Europe et al to start marketing digital music in earnest. ®

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