Piracy Squeezes Digital Growth
The digital music business has grown about 25 percent to $3.7 billion, but illegal and unpaid downloads are still responsible for 95 percent of the market.
Digital platforms now account for about 20 percent of recorded music sales, up from 15 percent in 2007. IFPI chairman and chief exec John Kennedy said he believes “the recorded music industry is reinventing itself and its business models.”
However, Kennedy is still likely to be pleased with news that more governments support proposed regulations on Internet piracy. It would require service providers to warn customers suspected of pirating films and music.
A report in Financial Times said rules set out in a new draft paper will force ISPs to collect data on serious and repeat offenders, which would then be made available to music companies or other rights-holders who can produce a court order for them to be handed over.
With the creation of a body called the Rights Agency, the measures are expected to form the spine of a new code of conduct for the Internet industry.
The draft report says the code would be overseen by Ofcom, the broadcasting regulator.
The IFPI report accompanying the new figures says the biggest challenge for music companies is generating value in an environment where 95 percent of music downloads are illegal.
The IFPI Digital Music Report 2009 published Jan. 16 is intended as a comprehensive overview of trends in the global music business.
It shows an industry that has shifted its approach from one based only on unit sales of music to “monetizing” access to music across a multitude of channels and platforms.
Single track downloads, up 24 percent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital album sales are also showing healthy growth (up 36 percent).
The report also shows how the digital age is expanding the role of music companies in developing and marketing artists.