Growth Of Digital Music Sales Doesn't Offset Losses - InformationWeek

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1/24/2008
03:37 PM
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Growth Of Digital Music Sales Doesn't Offset Losses

Industry group claims listeners shared tens of billions of illegal files in 2007, calls on ISPs to stop the copyright theft.

The music industry is ahead of most other creative and entertainment industries in terms of reaping revenue from digital sales, but recording artists and companies continue to suffer losses, according to a recent report.

The IFPI issued its 2008 Digital Music Report, which said that digital sales rose, but not enough to offset profit losses measured around 10% for the first half of 2007.

Global digital sales rose about 40%, from $2.1 billion to $2.9 billion from 2006 to 2007, and they accounted for 15% of the global music market, according to the report. In 2006, digital sales accounted for 11% of the global market.

The report found that only games are more advanced than music in terms of the percentage of revenue from digital media. The music industry's digital revenue percentage is more than twice that of newspapers (7%), films (3%), and books (2%), IFPI said.

U.S. online and mobile sales represent 30% of all digital music revenue, more than any other market, the report found.

Worldwide, more than 500 legitimate digital music services offer more than 6 million tracks, according to IFPI, which said that's four times the stock of music megastores.

Still, IFPI said "progress is hampered by lack of interoperability between services and devices, and lack of investment in marketing of new services."

And a global decline in CD sales will drag the overall market down from 2006, IFPI said.

IFPI said that listeners shared tens of billions of illegal files in 2007, at a ratio of 20 illegal tracks for every one legal track.

The global music industry group said that Internet service providers are in the best position to combat copyright theft. IFPI wants ISPs to deploy filtering technology and systematically disconnect copyright infringers.

"Independent estimates say up to 80% of ISP traffic comprises distribution of copyright-infringing files," IFPI said in the report.

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