21 January 2010

Digital Music Gains Cannot Offset Declining CD Sales

NY Times

PARIS — Sales of digital music rose 12 percent worldwide last year, but that growth was insufficient to compensate for plunging revenue from compact discs, the music industry’s international trade organization said Thursday.

The group, the International Federation of the Phonographic Industry, used the publication of the figures as an opportunity to renew its calls for a tougher crackdown on digital piracy, which it blames for a 30 percent decline in global music sales from 2004 to 2009.

“We’re all fed up talking about piracy, it’s boring talking about piracy, but it is the problem and we can’t avoid it,” said John Kennedy, chief executive of the trade group.

Critics say music companies have been too slow to embrace new online business models that are attractive enough to lure music fans away from pirate sites.

Over the past year, however, digital streaming services like Spotify, which offer free listening, supported by advertising or subscriptions, have gained a growing following. Revenue from streaming is accelerating, as growth in sales of digital downloads from services like Apple’s iTunes slows.

Over all, sales via the Internet, mobile phones and other digital methods totaled $4.2 billion in 2009 and accounted for 27 percent of music industry revenue, up from 21 percent a year earlier, the trade group said.

But with sales of CDs declining by double-digit percentages, Mr. Kennedy said the record companies’ overall global revenue for 2009 would fall 8 percent or 9 percent from 2008.

Mr. Kennedy said the decline in sales, which has persisted for nearly a decade since a 2001 peak in revenue, was hurting the development of local artists in a number of markets hit hard by piracy. In France, for example, signings of new artists by record labels fell by more than 60 percent from 2002 to 2008.

“Sadly, today we are not at the turning point in the music industry,” Mr. Kennedy said. “I still hope that in a few years’ time, that point will come.”

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