IFPI Digital Music Report points to growth in legal downloading

February 2006

Record labels, internet

Sales of music via the internet and mobile phones proliferated and spread across the world in 2005, generating sales of US$1.1 billion for record companies – up from US$380 million the previous year – and promising further significant growth in the coming year. The findings are released today in IFPI’s Digital Music Report 2006, a comprehensive review of the development of the digital music market internationally.  Music fans downloaded 420 million single tracks from the internet last year – twenty times more than two years earlier – while the volume of music licensed by record companies doubled to over 2 million songs.  Digital music now accounts for about 6% 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 research by Jupiter indicates more music fans (6% of the total user group in the UK) are legally downloading music than illegally file-swapping (5%). 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 40% 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$400 million-plus mobile music revenues. The Digital Music Report shows 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. 2005 has seen the new digital market take shape as courts around the world tipped the scales against unauthorised services and the market diversified into new formats and distribution channels. A series of court judgements against unauthorised file-sharing services in late 2005 – in the US, Australia, Taiwan and Korea – has helped transform the market environment for digital music and consumer attitudes to illegal file-sharing. Illegal activity on peer-to-peer networks has stayed static in the last year in comparison to a 26% increase in broadband use. Actions against illegal file-sharing, which in 2005 were extended to nearly 20,000 cases against uploaders in 17 countries, will be stepped up and spread to new countries in 2006.  They are supported by four separate global education campaigns which IFPI launched in 2005 – including the Childnet/Pro-music.org information campaign for young people and Digital File Check, the free software launched to help internet users enjoy music safely and legally on their computers.  

A PDF copy of the Digital Music Report and accompanying press materials are available on www.ifpi.org.   For the most exhaustive listing of legitimate online music services and information about music online visit www.pro-music.org

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