I-Content chief operating officer Alan Choy Yuk-pong said the company was confident in the market for its music downloads, despite the popularity of sites offering illegal downloads for free.

'We know not every user wants to download music illegally - they are quite willing to pay, they just don't have a choice,' he said.

A survey by market research group TNS estimates the local music industry has lost $1 billion in the past 30 months through illegal downloads.

The I-Content site provides files in Microsoft's WMA format with digital rights management (DRM).

DRM ensures the file cannot be shared among web users and controls the number of copies burned onto CDs and other devices, such as MP3 players.

Mr Choy said I-Content's music files can be played on Microsoft's Windows Media Player as well as the latest models of MP3 players.

He said the website was set up four years ago, but failed due to a lack of popular music technology to aid downloading.

'Now the technology is a lot more mature and we have great support from record companies,' Mr Choy said. 'Broadband penetration is a lot higher now.' Downloading on broadband takes about 10 seconds per song.

'Illegal downloading is very serious, and so we don't expect the website to be huge right at the beginning,' he said. 'It will take a while for the public to become accustomed to the service. The government has to do something to combat illegal downloading.'

Mr Choy said he expected the music market in Hong Kong to shift from being album-driven to comprising mainly sales of single tracks.

'[Downloading] may become the main music distribution channel,' he said. 'It's easier for companies to handle the production costs because they can see an immediate return from legal downloading.'

He did not fear introduction of legal downloads would hurt CD sales. 'Overseas studies show that the two actually complement each other. It is a very good way for users to try out different kinds of music,' he said.