RIAA Admits P2P Not Solely to Blame for Decreased Music Sales

RIAA Admits P2P Not Solely to Blame for Decreased Music Sales

Says that “comparing sales numbers only reveals part of the story,” and notes that in 2010 the music market “saw enormous growth” in online streaming music services like Vevo and Pandora where music fans don’t make any music purchases at all.

The music industry has long made it seem that P2P is solely to blame for the overall decline in legal music purchases, but by its own recent admission this isn’t true, there are many more reasons why revenues are still in decline.

According to Nielsen SoundScan, digital music sales are still nowhere close to compensating for the decline in physical music purchases. Last year digital album sales rose 13% to 86 million while physical CD sales declined by 20% to 240 million sales. Overall album sales were down 13%.

Digital music now accounts for 46% of all music purchases; up from 40% in 2009 and 32% in 2008. It’s this fact that should be most troubling to the music industry because digital music has lower price points and allows music fans to cherry pick the songs they want on services like Apple’s iTunes. These two things squeeze the amount of money record labels can make on both ends – the number of songs purchased and the amount paid per each.

Thanks to decreased distribution and nonexistent packaging costs the price needed to charge consumers for music is decreasing, thus lowering its overall revenue by default.

There are also other forces at work that have caused a decline in music purchases and one of them, by the RIAA’s own admission, are free music streaming services.

“As we and other industry observers have noted, comparing sales numbers only reveals part of the story,” it says in a recent blog post by Joshua P. Friedlander, the RIAA’s Vice President of Research and Strategic Analysis. “Perhaps more telling about the direction in which the music market is headed, 2010 saw enormous growth in online streaming music and access models. Although the growth of services like Vevo and Pandora have been well documented, the growth of revenues from streaming services is becoming more significant.”

There you have it. Music sales only reveal “part of the story.” When it regularly lobbies members of Congress to pass legislation like the controversial Combating Online Infringement and Counterfeits Act (COICA) you can bet it doesn’t have an asterisk next to the figures for declining album sales that says “only reveals part of the story.”

Copyright holders always need to make file-sharing seem like much more of a problem that it really is, and admitting that P2P is only partially to blame for its woes wouldn’t help pass “urgent” legislation like giving the justice dept. a fastrack process for seizing domain names before owners have a chance to contest the charges in court.

A UK survey has even shown that streaming music has already caused a majority of young adults (54%) to quit illegally downloading music altogether.

At some point the music industry has to publicly admit that its business model has changed, and that its woes aren’t solely to blame on illegal file-sharing. Music fans have an increasing variety of listening options these days, and many of them will mean much less revenue for the music industry. Making a playlist on YouTube, for example, or cranking up Pandora, on a daily basis by millions if not billions of people worldwide is a much greater cause for declining music industry revenues than is a guy who downloaded an album that he may not have even bought otherwise.

Stay tuned.

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