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Microcap & Penny Stocks : Compact Connection (TSIG) - The next CDNW?
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To: Dixie7777 who wrote (1563)8/16/1998 11:44:00 AM
From: Mags  Read Replies (1) of 1574
 
I have to respectfully disagree with you regarding your statement that at the end of '99 there will only be 1 or 2 participants left standing. The online Cd sales industry is no where near being a mature market. Here are a few numbers that support my assertions:

- World-wide market for recorded music is $40.9 billion in annual sales and is expected to grow to $62.1 billion by 2002 (source, Market Tracking International, 1997)
- Online component is expected to be $179 for 1998 and $2.8 billion by 2002 (source, Jupiter Communications)

From those numbers, you can see that not only is the online proportion of music sales growing rapidly (.4377% in 1998 to 4.5% in 2002) but overall sales for recorded music is expected to grow by 50% during that period. This market is clearly in its infancy and with no barriers to entry, there is plenty of room for competitors. Furthermore, in the next few years there won't be any industry consolidation because of the rapidly expanding size of the overall market. Competitive pricing and industry consolidation only occur when a market is mature and companies can no longer increase sales by gaining the same pro rata share of an expanding market but instead have to take market share away from competitors.

With all of that being said, I am long TSIG and I think that even a small share of this rapidly expanding industry would prove very lucrative to shareholders. However, for TSIG to really become a dominant player, they are going to have to evolve their business model as the market changes in ways that no one can predict with any accuracy now.
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