Blames decline on piracy, but ignores shift to digital music where consumers cherry pick single tracks rather than purchase an entire album as was the case in the era of physical media.
The International Federation of the Phonographic Industry (IFPI), the esteemed group behind the tactic to use child porn as a pretext for Internet filtering in its war against online piracy, has just published its Recording Industry in Numbers 2010 to provide a “comprehensive picture of key trends of today’s music business.”
According to its data, global recorded music sales declined some 7.2% last year to $17 billion USD. However, digital music sales rose by 9.2% to $4.3 billion USD, more than ten times its value in 2004.
“This is disappointing, but amid the decline there are some very positive points. No fewer than thirteen countries saw music sales grow in 2009, including important markets such as Australia, Brazil, South Korea, Sweden and the UK,” said IFPI chairman and CEO John Kennedy. “Digital sales in some of those markets rose at very encouraging rates, reflecting the new opportunities of online and mobile channels. South Korea and Sweden in particular saw striking returns to growth, showing how an improved legal environment can help impact on legitimate music sales.”
The key to the data lies in the growth of digital music. The IFPI says that 80% of the decline in sales occurred in the US and Japan, the two most electronic gadget-obsessed countries in the world, and where the transition from physical media has been the most pronounced. In the US alone its says digital sales account for nearly half – 43% – of the recorded music market.
What does this mean? It means what people already know each time they purchase music on the likes of Apple’s iTunes or other legal music distribution services. Consumers no longer have to buy an entire physical, or even digital for that matter, album as used to be the case. Music fans can buy the latest and greatest hot for 99 cents, a stark drop in revenue for an industry that had been long accustomed to a $19.99 album price point (I still can’t believe they used to charge that much by the way).
The IFPI can blame piracy all it wants, but the decline in recorded music sales is much more complicated than their bogus 1:1 lost sales figures they would have you believe.
“Reducing piracy is critical if these improvements are going to translate into long term recovery for our global business,” adds Kennedy. “Here too there are encouraging developments. France and the UK, in particular, are leading the way with new legislation.”
That’s particularly odd because according to the British Phonographic Industry (BPI) recorded music sales in the UK have not only “recovered” (whatever that means), but they actually rose last year by 1.4% to £928.8m ($1.4m USD).
That’s on top of last year’s report by Will Page, the Chief Economist for PRS for Music, a UK-based royalty collecting group for music writers, composers, and publishers, that found total music industry revenues were up 4.7% since 2007.
What is the UK music industry doing that’s so special? Whatever it’s doing perhaps its IFPI cousin ought to reproduce it on a global scale.
When it all comes down to it, the music industry is going to have to diversify its sources of income if it hopes to maintain revenue figures. It’ll NEVER EVER sell as many digital as it did physical albums and so it’ll need to do as Page reported, seeking out “more complex business to business revenues (from collective and direct licensing, advertising, sponsorship).”
Blaming piracy does nobody any good.
Stay tuned.
Wasn’t there some sort of recession going on? And they’re surprised sales have dropped?
Part of that has got to be the way people are buying music; instead of paying for a full album, they are spending less buying just the tracks they want.