Digital music sales triple

20 Jan 2006

Sales of music via the internet and mobile phones proliferated and spread across the world in 2005, generating sales of US$1.1bn for record companies — up from US$380m the previous year — and promising further significant growth in the coming year.

This is according to a report by the International Federation of the Phonographic Industry (IFPI), which represents the recording industry worldwide.

Music fans downloaded 420 million single tracks from the internet last year – 20 times more than two years earlier – while the volume of music licensed by record companies doubled to over 2msongs. Digital music now accounts for about 6pc of record companies’ revenues, up from practically zero two years ago.

The legitimate digital music business is steadily pushing back on digital piracy. In Europe’s two biggest digital markets, UK and Germany, new IFPI research indicates more music fans are legally downloading music than illegally file-swapping.

The mobile phone became a portable music device in 2005, the first year in which song downloads to mobile phones spread internationally. Mobile music now accounts for approximately 40pc of record company digital revenues. Record companies are seeing sharply increased sales of master ringtones (excerpts of original artist recordings), which account for the bulk of their US$400m-plus mobile music revenues.

IFPI’s Digital Music Report illustrates how music is helping drive economic activity worth tens of billion of dollars; identifies key challenges, notably over intellectual property protection, that need to be faced if the digital music business is to sustain this success; and assesses the impact of the educational and enforcement actions taken by the music industry in 2005.

A spokesman for IFPI said: “Two years ago, few could have predicted the extraordinary developments we are seeing in the digital music business today. And there will be further significant growth in 2006 as the digital music market continues to take shape.

“Already in the UK and Germany – two of the biggest digital markets worldwide – legal buyers from sites like iTunes, Musicload and MSN actually exceed illegal file-swappers. We expect this trend to spread as new and pioneering legal music distribution channels open up to consumers.

“This is great news for the digital music market and the wider digital economy. Record companies are licensing their music prolifically and diversely. A new wave of digital commerce, from mobile to broadband, is rolling out across the world. It is generating billions of dollars in revenues, and it is being driven, to a large extent, by music – by the people who create music, who produce it and who invest in it.

“The challenges we now face are far too big for any complacency, however. In particular we need more cooperation from service providers and music distributors, to help protect intellectual property and contain piracy. It is not enough that they share in the success of the digital music business – they need to take on their share of the responsibilities as well,” the spokesman said.

By John Kennedy