Consumers move to the music online

21 Jan 2005

Legal music downloads passed the 200 million mark last year, a tenfold increase on 2003, the representative body of the recording industry has said. In addition, the number of songs available through pay sites doubled to one million during the same timeframe.

In its Digital Music Report 2005, the International Federation of the Phonographic Industry (IFPI) said that more users than ever before were buying songs in digital format over the web. As a result, record companies are starting to see significant revenues from the medium. The report cited figures from Jupiter Research that the value of legitimate music online was US$330m in 2003 and this figure will double in 2005.

The report found that “well over 200 million” music fans in the US and Europe downloaded songs from legitimate sites last year, a massive jump from 20 million in 2003. There are now more than 230 websites where consumers can buy music legally, up from 50 a year ago.

The IFPI noted a shift in consumer attitudes to digital music, citing a new survey in six European countries (Denmark, France, Germany, Italy, Austria and the UK) showing that 31pc of music downloaders intend to buy from legal music services in the coming months, compared to 22pc currently. The popularity of dedicated portable music players and mobile phones with playback features have also helped increase the popularity of downloading music.

It wasn’t all good news, however. The report also stressed that more needs to be done to promote the digital music business and to fight internet piracy. Although growth rates are high, music downloading is still in its infancy; less than one in 10 people download songs from the internet. Only half of those in the key 16-29 age group are aware that there are legal ways of buying music online.

“The biggest challenge for the digital music business has always been to make music easier to buy than to steal,” said John Kennedy, IFPI chairman and CEO. “The record industry’s priority now is to licence music – to as many services, for as many consumers, on as many formats and devices for use in as many places and countries as it can. The straightforward conditions are that the business must be legitimate, the music must be correctly licensed, and record companies and other rights holders must get properly paid.”

Kennedy said he was confident that the digital music market would grow “very significantly” worldwide throughout 2005. “A sector that now accounts for a very small percentage of the industry’s revenues is poised for take-off in the next few years. At long last the threat has become the opportunity.”

Chris Gorog, chairman and CEO of Napster, commented: “2004 has been a landmark year for the music industry. The digital services have given the industry the shot in the arm it needed – stimulating the public’s appetite for consuming music while giving them a superior, legal alternative to the p2p sites. As broadband penetration becomes more widespread, the digital services will take even greater hold and continue their expansion into both established and emerging music markets.”

By Gordon Smith