New York, NY (January 29, 2009)—The growing range of new services and delivery mediums for recorded music have not yet generated value to content producers, concludes the International Federation of the Phonographic Industry (IFPI).
An estimated 95 percent of music downloads are illegal and unpaid for, says the Digital Music Report 2009, issued by the London-based association, and remain the music industry’s biggest challenge.
In the first half of 2008, for example, album releases by new artists in France fell by 16 percent and local artists accounted for just 10 percent of albums, compared to 15 percent in the first half of 2005. Only one new local artist featured in the Top 50 albums in Spain from January to November 2008, compared to 10 in 2003.
On the plus side, digital music grew by an estimated 25 percent to $3.7 billion in 2008, says the report. “Digital platforms now account for around 20 per cent of recorded music sales, up from 15 per cent in 2007,” it states. “Recorded music is at the forefront of the online and mobile revolution, generating more revenue in percentage terms through digital platforms than the newspaper (4 percent), magazine (1 percent) and film industries (4 percent) combined.”
Social networking sites, music sybscription services and new licensing channels are also emerging, among them MySpace Music and Nokia Comes With Music. But the degree of unauthorized online distribution remains overwhelming: The IFPI estimates over 40 billion files illegally shared online in 2008
Among the IFPI’s other findings: single track downloads, up 24 percent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums were up 36 percent as well. The top-selling digital single of 2008 was Lil Wayne’s “Lollipop,” with sales of 9.1 million units–1.8 million more than the best selling digital single of 2007.
“The recorded music industry is reinventing itself and its business models,” says John Kennedy, chairman and chief executive of IFPI. “Music companies have changed their whole approach to doing business, reshaped their operations and responded to the dramatic transformation in the way music is distributed and consumed.
“There is a momentous debate going on about the environment on which our business, and all the people working in it, depends. Governments are beginning to accept that, in the debate over ‘free content’ and engaging ISPs in protecting intellectual property rights, doing nothing is not an option if there is to be a future for commercial digital content.”
The report states that music companies are increasingly licensing music to third parties, such as games. Guitar Hero and its sequels have sold more than 23 million copies in three years, generating more than$1 billion in North America alone.