Despite piracy, digital sales now represent 27% of label’s revenue

February 2010

Internet, record labels

The IFPI’s Digital Music Report 2010 shows that global digital music trade revenues reach US$4.2 billion, up 12% in 2009 are representing over a quarter of all recorded music revenue worldwide. Over over  400 services are licensed worldwide. The Report outlines how music companies are diversifying their revenue streams, offering new ways for consumers to buy and access music. These include: subscription services; music services bundled with devices and broadband subscriptions; streaming services with applications for mobile devices; advertising-supported services that offer premium services; and online music video services.
However the IFPI says that despite the continuing growth of the digital music business –illegal file-sharing and other forms of online piracy are eroding investment and sales of local music in major markets.  In particular, three countries known for the historic vibrancy and influence of their music and musicians – Spain, France, Brazil – are suffering acutely, with local artist album sales or the number of releases plummeting.

The IFPI say that governments are gradually moving towards legislation requiring ISPs to curb digital piracy but adds that progress needs to be much quicker.  In 2009, France, South Korea and Taiwan adopted new laws to address the label’s crisis. Other governments, including the UK and New Zealand, have proposed new laws for adoption in 2010. ISP Verizon in the USA has voluntarily introduced their own ‘graduated’ system of warning letters and eventual internet cut-off for persistent illegal downloaders.

Sales of music downloads, the dominant revenue stream in digital music, are seeing steady growth. Single track download sales increased by an estimated 10%, while digital albums rose an estimated 20% in 2009.  Recent innovations in this sector include the introduction of variable pricing, which has increased the conversion of track purchases to album sales, as well as the launch of the iTunes LP and the rollout of DRM-free downloads internationally. The Report shows that, while the music industry has increased its digital revenues by 940% since 2004, piracy has been the major factor behind the overall global market decline of around 30% in the same period.  Overall, global music sales in the first half of 2009 were down by 12% (physical and digital sales) and full year figures are likely to see a similar trend. Third party studies overwhelmingly conclude that the net impact of illegal file-sharing is to depress sales of music. Two surveys confirmed this in 2009 – by Jupiter Research, covering five European countries, and Harris Interactive, covering the UK.  According to Jupiter, around one in five internet users in Europe (21%) shares unauthorised music.

To download a copy of the report go to

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