“3-Strikes” Recall? UK Music Sales Up 1.4% in 2009

“3-Strikes” Recall? UK Music Sales Up 1.4% in 2009

British Phonographic Industry says a strong fourth quarter and increased digital income streams offset declining physical sales, contradicting claims that the music industry is in a freefall that required immediate “3-strikes” legislation via the recently passed Digital Economy Act to stabilize.

Sometimes its better to keep good news to yourself, especially if you’ve just helped drag an entire country through a nasty legislative process that leaves everybody else on the hook for your own mistakes and shortcomings.

Such is the case in the UK where the British Phonographic Industry (BPI) has just announced that last year’s recorded music sales rose some 1.4% to £928.8m ($1.4m USD). It attributes the rise to a stronger than expected fourth quarter and increased revenue from digital income streams, offsetting a continued decline in physical format sales.

The BPI says that digital income revenue rose a startling 47.8% to £188.9m ($292 million USD) and now represents a fifth (20.3%) of overall recorded music revenues, taking into account earnings from online downloads alongside mobile, subscriptions and ad-supported services.

Unsurprisingly, physical music sales declined for the sixth year in a row, down 6.1% in 2009.

“It’s encouraging to see industry revenues stabilize and even show modest growth in 2009,” says Geoff Taylor, BPI Chief Executive, in a press release. “This is testament to continuing investment by UK labels in talented artists despite challenging economic conditions, and the innovation labels have shown in licensing new digital services.”

That’s the thing. Last July, Will Page, the Chief Economist for PRS for Music, a UK-based royalty collecting group for music writers, composers, and publishers, published a study concluding that total music industry revenues were up 4.7% since 2009.

How? Because of increasing diversification of revenue streams. It’s more than just album sales. The music industry also earns money from things like licensing, advertising, and sponsorship deals.

Yet, the good news is still bad news in the topsy turvy music world where up is down and down is up. Taylor laments that digital music sales aren’t growing fast enough to compensate for the decline in physical format sales, and blames the problem on illegal P2P.

“The pace of growth of new digital services is encouraging, but the size of the market continues to be constrained by competition from illegal downloads,” he adds.”

Is P2P really to blame? The big difference between digital and physical music sales is the ability to “cherry pick” what you want to buy. Instead of buying an entire album, as was the case with physical CDs, consumers can now buy the greatest hit for a measly $1.29 on Apple’s iTunes. It’s impossible to reconcile the two. Digital music sales will always be far less than physical sales ever were.

This is all of no consequence to the BPI who so strenuously pushed for the recently enacted Digital Economy Act, parts of which were at one point taken verbatim from letters it sent to the govt demanding action. The Act, which includes a “three-strikes” regime for file-sharers, a ban on public access Wi-Fi, and website filtering does little to address the root of the problem: an outdated business model that has yet to fully embrace the digital age.

With music sales up, even a measly 1.4%, it’s hard to reconcile the fact that throughout the Act’s legislative ordeal the BPI claimed that without it millions of jobs, and the very survival of the music industry was at stake. So much for that.

Worse still, the BPI said earlier this month it was going to take matters into its own hands and begin suing file-sharers until the govt implements the technical measures – i.e. “three-strikes” – promised in the Act if warnings alone fail to “significantly reduce” illegal file-sharing.

So even when the music industry gets what it wants it demands more. It seems to me the only solution to it all is to quit buying music from any source other than directly from artists.

Stay tuned.

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