“IFPI Reports Declining Physical, Increasing Digital
A decline in physical formats is being slowly offset by an increase in digital sales, according to global music industry trade group IFPI. Sales of physical product dipped 1.9 percent to $13.2 billion worldwide during the first six months of 2005, per the recently published figures. But the digital story is starting to show some traction, moving to $790 million during the period, a sizeable jump from $220 million over the same window in 2004. Meanwhile, digital sales now account for 6 percent of the overall pie.
The IFPI aggregated retail values of a-la-carte downloads, music subscriptions and mobile music revenues like master ringtones to tally the digital picture.
For the most part, the latest figures are not a surprise, though hard revenue data related to overall physical sales can be hard to come by. Now, the question is whether digital revenues will grow fast enough to replace an overall slide is pre-recorded CD sales, which are steadily losing ground year-over-year. So far, the decline in CDs is not showing a bottom, and some industry observers see precipitous declines by the end of this year. In its report, the IFPI recognized the impact of illegal file-sharing on the physical declines, though it pointed to increasingly successful enforcement efforts. “Our actions to contain internet piracy, whether by education or by litigation, are working,” commented IFPI chief John Kennedy. “And the legal environment is improving, with a series of recent decisions against unauthorized file-swapping services such as Kazaa helping to shift the balance in favor of the legitimate business.” The US, Japan, UK, Germany and France were the most active markets for digital product.”