Digital music sales soaring, industry group says

Digital music rocks, a London based music industry group says.

Digital music rocks, a London-based music industry group says.

Record companies sold $2 billion US worth of digital music last year, nearly double the 2005 figure, the International Federation of the Phonographic Industry (IFPI) said in its annual review, released Wednesday.

The sales, which amount to 10 per cent of all wholesale music sales, includepurchases made through online outlets or throughcellphone companies.

Among other market indicators:

  • The number of titles available onlinedoubled to four million.
  • Sales of classical music revived oncemore titles were put online, and a New York Philharmonic Mozart recordinghit the iTunes top 40 in the U.S. and Britain.
  • Record companies began to make money from ads on their websites.

Record companies are experimenting with newbusiness models and digital music products, which has involved the companies withhundreds of licensing partners.

Download services likeiTunes are the main digital format, butsubscription services, mobile mastertones — snips of music produced as ringtones by record companies — advertising-supported services and deals allowing music videos to be played onsites like YouTube are all evolving.

Mobile salesaccounted forhalf of digital revenues in 2006 (90 per cent in phone-mad Japan),and are expectedto jump this year as handset makers such as Nokia and Sony Ericsson move deeper into music.

Consumers score

But users are the big winners, IFPI chairman and CEO John Kennedy said in the report. "They have effectively been given access to 24-hour music stores and services with unlimited shelf space. They can buy or consume music in new ways and formats — an iTunes download, a video on YouTube, a ringtone or a subscription library," he said.

Because of the virtually infinite shelf space, consumers are buying records that would have disappeared from even the largest traditional retailers, the report said.

But sales of digital music still have some way to go, becausethey're not offsetting the drop in CD sales, IFPI said. Piracy is a major reasonwhy thedigital marketdid not cover thedeclinein the "physical" market last year.

"Digital piracy and the devaluation of music content are a real threat to the emerging digital music business," despite the record industry's legal pursuit of digital pirates.

About 10,000 cases were launched in 18 countries against large scale peer-to-peer uploaders, the people who make illegal music file-sharing possible.

That helped, IFPI said, but the group is still pressuring internet service providers to stop uploaders, and wants governments and companies to help protect intellectual property rights.