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Digital music up 12%, yet to offset CD slump

updated 01:40 pm EST, Thu January 21, 2010

Online music sales not yet at turning point

Online sales of music were up significantly in 2009 but still weren't enough to compensate for dropping CD sales, the IFPI said today in its annual overview. The revenue from Amazon, iTunes and other sources climbed 12 percent to $4.2 billion during the year, but a corresponding drop in CD sales is estimated to have made total revenues shrink by 8 to 9 percent to about $15.6 billion.

The international music group again blames piracy for much of the shortfall but notes that it's no longer as centralized on peer-to-peer services as it was before. Some of it now occurs from direct hosts, including forums and IM, as well as stream rips. Agency officials allege that copying has had an especially destructive effect on local music, with local releases or sales falling between 60 to 80 percent in countries like France and Brazil.

Gains in digital sales instead were fueled mostly by a 20 percent boost to album purchases: the IFPI believes that switching to variable pricing at iTunes and other stores actually helped album sales as it helped convince some to get the full collection instead of opting for just one track. Single-song purchases were up only 10 percent compared to their 2008 levels.

Other recent efforts like iTunes LP may also help, the IFPI suggested in the report. These provide incentive to buy the full album by supplying photos, videos and other extras that aren't present in singles.

The split is likely to shift as streaming services like Spotify and MySpace Music, as well as music video hosts like Hulu and YouTube's Vevo, have grown rapidly in the past 12 months.



By Electronista Staff
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Comments

  1. elroth

    Junior Member

    Joined: Jul 2006

    +3

    not so fast

    IFPI is totally owned and operated by the music companies - the report is not independent. It goes on and on about piracy killing music industry revenues.

    The figures for online and CD sales are interesting (73% of music revenue still comes from CDs).

    But the report's conclusions are biased and should not be taken as proper analysis.

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    +4

    Albums vs. singles

    Even if we agree to accept these numbers, there is a clear explanation for the drop. People who buy downloads refuse to pay for 'filler', and will only buy songs they want and like. Since fewer people pay for filler (by buying CDs), labels are now less and less able to sell people filler and make their money on it.

    This is all good, since it will essentially make labels to get artists to produce more hits and less c*** (or watch themselves go out of business).

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