January 25, 2008

Digital Music Sales Up Worldwide

While record companies' revenue from digital music sales rose 40 percent to $2.9 billion over the past year, the growth is still failing to cover losses from the collapse of international CD sales.

The International Federation of the Phonographic Industry, or IFPI, told AP that the increase in legitimate music sales did not come close to offsetting the billions of dollars being lost to music piracy, with illegal downloads outnumbering the number of tracks sold by a factor of 20-to-1.

The trade group added that it welcomed efforts by French President Nicholas Sarkozy, who has proposed a clampdown on those who violate copyright laws.

Sarkozy, in November, called for Internet service providers in France to automatically disconnect customers involved in piracy.

IFPI chief John Kennedy told AP that the plan is "the most significant milestone yet in the task of curbing piracy on the Internet."

The industry body added that CD sales fell 11 percent between 2005 and 2006, and were likely to drop further in 2007. Digital music revenue has so far failed to make up for the decline, and is also showing signs of slowing.

From $380 million in 2004, digital revenue roughly tripled in 2005 and nearly doubled in 2006. 2007 sales should rise only a modest 40 percent, according to the IFPI.

It added that digital downloads have grown in five years to account for 15 percent of the world's music sales, with more than 500 legally licensed music sites selling around 6 million tracks of music.

Japan is continuing to drive the digital market, AP reports, particularly as a result of consumers using cell phones to download music.

Utada Hikaru, a Japanese singer, sold more than seven million units in various digital formats of her single "Flavor of Life", which was originally released as a ringtone.

However, young Japanese mobile Internet users are also likely to abuse pirated music.  The Recording Industry Association of Japan report that nearly two-thirds of Japanese frequently obtained illegal music through their phone.


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