London - With an estimated nearly 500 online music services currently operating in over 40 countries, consolidation is inevitable and acquisitions of smaller firms by bigger providers will be seen over the next two years, according to a report from market research firm Point Topic.

"We believe that the consolidation of the digital music market is inevitable. There are still hundreds of online music suppliers worldwide, over 300 in Europe alone," said Point Topic senior analyst John Bosnell.

"2008 and 2009 will see buyouts for some and bankruptcy for others."

Apple (NASD: AAPL) just became the second-largest music retailer in the U.S., behind Wal-Mart, according to NPD Group data, while smaller market shares are held by services such as Amazon, Napster, Rhapsody, Microsoft's Zune and others.

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