Sales of Digital Music Climb to 15% of Total

Jan 25, 11:57 AM

Global sales of music in digital form rose to $2.9 billion last year from $2.1 billion a year earlier, the music industry's international trade group said Thursday, registering a growing - but slowing - percentage of overall music sales.

Digital music, distributed online or via mobile networks, represented 15 percent of overall industry sales last year, up from less than 1 percent in 2003 and 11 percent in 2006, according to the International Federation of the Phonographic Industry.

But the rate of growth in digital sales is slowing; after a near doubling in 2006, the rate eased to less than 40 percent last year. Meanwhile, sales of compact discs continue to fall sharply, and increased digital revenue has yet to make up the difference. Overall industry sales fell about 10 percent last year, to around $17.6 billion, the federation estimates.

A recovery in the music industry, walloped by digital piracy, remains at least a year away, John Kennedy, chief executive of the IFPI, said in an interview.

The industry's troubles were highlighted this month when EMI, the smallest of the four major recording companies in terms of market share, announced plans to eliminate as many as 2,000 of its 5,500 employees, amid a steep decline in sales.

While the industry may see another year of decline, Kennedy said, there are some positive signs in the battle against illegal digital file-sharing, which the record companies cite as the main reason for their woes. In November, Internet service providers in France, in a deal brokered by President Nicolas Sarkozy, agreed to a plan under which they would shut down the accounts of persistent copyright pirates.

Kennedy said the record companies would step up their efforts to enlist the support of Internet service providers, either through voluntary action or through the courts.

"If people can be made to understand that free is not an option, we could get a dramatic improvement," Kennedy said. "That, for me, would be the beginning of a recovery."

Industry representatives are meeting with service providers in countries like Britain and Sweden, where government-sponsored reports have recommended that ISPs play a greater role.

In China, where piracy is rampant, the music industry plans to file a new lawsuit against Baidu.com, the largest Internet provider, within weeks, Kennedy said.

The music industry lost a previous round of court battles against Baidu, but took hope from a recent verdict against another service provider, Yahoo China, which was found guilty of copyright violations for linking users to file-sharing sites. Kennedy said regulations in China had been tightened in between the time the two cases were filed, providing hope for a future legal attack on Baidu.

Though growth in digital sales is easing, Kennedy said the industry remained on track to reach a previous projection that 25 percent of sales would be digital by 2010. The United States already moved beyond that level last year, reaching 30 percent. But many other markets are far behind; in France, for instance, digital sales were only 7 percent of the total in 2007.

Originally published by The New York Times Media Group.

(c) 2008 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved. Sales of Digital Music Climb to 15% of Total
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