January 16, 2009

Report Shows Music Piracy Outweighs Legal Downloads

A report by the International Federation of the Phonographic Industry (IFPI) has shown that up to ninety-five percent of music downloaded online is illegal.

This is the biggest challenge artists and record companies face as they miss out on payments, the global music trade body said.

However, music sales have shown a 25% rise since last year, with downloads now accounting for a fifth of all recorded music sales, and the IFPI stated that worldwide music market revenues shrank by 7% last year.

Yet the increase in digital sales failed to make up for the falling revenue in CD sales.

Over 1,400 companies in 72 countries are represented by the IFPI, which estimated more than 40 billion music files were illegally shared in 2008.

More than 1.4 billion single tracks were legally downloaded in 2008, with the top-selling digital single, Lil Wayne's Lollipop, selling 9.1 million copies.

"Despite the launch of many legal download services, customers still seemed to prefer to get their music free online," said BBC technology correspondent Rory Cellan-Jones.

The report noted that the digital music business has grown steadily during the past six years, growing by an estimated 25%.

Analysts project its overall worth at around $3.7 billion.

The industry has changed its approach to doing business, according to John Kennedy, chairman and chief executive of IFPI.

"There is a momentous debate going on about the environment on which our business, and all the people working in it, depends," he said.

"Governments are beginning to accept that, in the debate over 'free content' and engaging ISPs in protecting intellectual property rights, doing nothing is not an option if there is to be a future for commercial digital content."

Jim Killock, executive director of the Open Rights Group, said his company is worried by the recording industry's desire to clamp down on illicit file sharers.

"We need to see how much better these companies do by getting their services right before governments start pushing drastic and draconian laws forward."

He is confident that growing online sales show the recording industry can win against illicit file sharing.

"If companies go further and offer the same sort of experience as P2P then they will win new revenues, and reduce copyright infringement, which we would welcome."


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