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Labels Must Start Licensing Catalogs to Meet Growing Consumer Demand

In what has become an annual tradition, Jupiter today released its vision for the online music industry during the opening session of Plug.In: The Jupiter Online Music Forum in New York City. Jupiter projects that the online music market will secure approximately one-fourth of the total US music market in five years, with digitally distributed products representing 28 percent of total online music dollars, or a $1.5 billion market in 2005. However, the growth of networked music sharing, such as Napster, reveals a consumer readiness for subscription services, which will account for $980 million in 2005 vs. a la carte download music, which will grow to $531 million in 2005.

Aram Sinnreich, an analyst for Jupiter covering the online music industry, explained that digital music has yet to yield overwhelming direct revenues, but its impact on physical product sales has been powerful and positive. ``There has been a dramatic change in the Internet music industry in the last year, but its not in the number of dollars that consumers spend, it`s the whole music experience,'' explains Sinnreich. ``What we are seeing is the opportunity for a new format of product in the commercial music industry, enabled by digital music service providers who can wrap tools, technology and content around the core library of songs.''

However, one of the challenges for subscription services will be to get consumers to shift to them from existing services such as Napster and Gnutella. The deciding factors for consumer adoption will be to address two of the subscription services' their most important features: guaranteed file quality and virus protection. Consumers identified these two features, over other content offerings such as artist chats, album art and an advertising free zone, as most important in their decision to pay for a music subscription service.

``Record labels and intellectual property owners have demonized various forms of online music sharing, even as it has gained enormous traction among consumers,'' said Sinnreich. The truth is that a better-informed user will purchase more music products online and off.``

A Jupiter Consumer Survey of 2,200 online music fans asked where if they had ever decided for or against a music purchase based on a free download. Fourteen percent responded that the download enticed them to purchase, whereas only seven percent decided not to purchase because they already had the downloaded song.

Plug.In: The Jupiter Online Music Forum, which began today in New York City at the Sheraton Hotel & Towers. Now in its fifth year, Plug.In, sponsored by Billboard magazine and Digital Club Festival, serves as one of Jupiter's most successful events. This year's agenda features an impressive panel of music visionaries, including keynote speakers Richard D. Parsons, president, Time Warner Inc.; Rob Glaser, chairman and CEO, Real Networks; and Mike D of the

Beastie Boys. Top executives from Napster, Def Jam Records, MP3.com, BMG Entertainment, and RIAA will join Jupiter's analysts and keynote speakers to address issues such as record label strategies, digital distribution, music-oriented online content, and intellectual property that define this evolving market.

US Online Music Spending

                               1999   2000   2001   2002    2003    2004   2005
                     ----   ----   ----   ----    ----    ----   ----
Total Online Music
 Spending (millions) $387  $836  $1,469  $2,259  $3,181 $4,219  $5,364
% of Market Online    2.7%  5.5%    9.1%   13.3%   17.4%  21.3%   24.6%

Physical Product     $387  $826  $1,431  $2,109  $2,713 $3,299  $3,853
A La Carte Downloads   $0    $9     $34     $88    $189   $339    $531
Digital Subscriptions  $0    $0      $5     $63    $278   $581    $980

Source: Jupiter Communications, Inc.

Panels taking place during Plug.In sessions will address issues, including, who controls digital rights in areas such as downloads, radio, retailing, and consumer data; selecting strategies necessary to allow labels, artists, media companies, and retailers to capitalize on the Web's invaluable marketing capabilities; identifying new technologies and trends revolutionizing the music business, and exploring ways to turn file-sharing services into revenue-generating ventures; identifying best-of-breed business models for start-ups and established players; and discussions centering on whether new subscription schemes will make the role of the retailer obsolete.

Plug.In will also feature an expanded trade show floor, with over 100 companies sharing their products and services. Key forum sponsors include MTVi Group, RioPort and NetRadio.com.

In its rich history of offering information on the Internet music industry, Plug.In: The Jupiter Online Music Forum has served as the platform for industry luminaries to present, debate, and announce market changes. Past speakers have included Strauss Zelnick, president and CEO, BMG; Tom Freston, CEO, MTV Networks; John Sykes, president, VH1; and Hilary Rosen, president and CEO, RIAA. Plug.In has also attracted leading artists in the digital space, including Chuck D, Thomas Dolby, and Laurie Anderson.

Jupiter will expand its series of Plug.In events in 2001 with the launch of Plug.In Europe, scheduled for April 2 and 3 in Barcelona, Spain. To receive information on Plug.In, Plug.In Europe or other Jupiter forums, contact Jupiter at 800-414-6740 ext. 6424 (international callers can dial 917-534-6424) or visit Jupiter online at www.jup.com/events/forums/. Companies interested in sponsorship and exhibitor opportunities should contact Rich Regan at 917-534-6138, or via e-mail at rich@jup.com. Journalists inquiring about press credentials should visit Jupiter's Web site at www.jup.com for press pass applications.

Jupiter Communications, Inc. (Nasdaq:JPTR) is a leading provider of research on Internet commerce. Jupiter's research, which is solely focused on the Internet economy, provides clients with comprehensive views of industry trends, forecasts, and best practices. The company's research services are provided primarily through its continuous subscription services. Jupiter also produces a wide range of conferences that offer senior executives the opportunity to hear firsthand the insights of its analysts and the leading decision-makers in the Internet and technology industries. Jupiter Communications is based in New York City, with operations in London, San Francisco, Stockholm, Sydney, and Tokyo. For more information on Jupiter Communications visit http://www.jup.com.

This press release contains statements of a forward-looking nature relating to future events or future financial results of Jupiter Communications, Inc. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially. In evaluating such statements, investors should specifically consider various factors, which could cause actual events or results to differ materially from those indicated from such forward-looking statements, including the matters set forth in Jupiter Communications' reports and documents filed from time to time with the Securities and Exchange Commission.

Contact:

     For Members of the Editorial Media:
     Jupiter Communications, Inc.
     Diane Schreiber, 415/503-6121
     dianes@jup.com
      or
     Jupiter Communications, Inc.
     Michele Husak, 917/534-6208
     mhusak@jup.com