Music fans burn CD biz

Disc copying leads to trouble in tune town

Consumers burning their own CDs are hurting the retail music business, the RIAA contends, even as the sale of digital downloads continues to explode.

Meanwhile, the shipment of compact discs from record companies to various distribution channels declined 6.5% in the first half of 2005, the Recording Industry Assn. of America reported Monday. Music shipments of all physical formats were down 5.8% from the first half of 2004, it said.

Globally, recorded music sales fell 1.9% to a retail value of $13.2 billion in the first half of 2005, compared with $13.4 billion in the same period of 2004, according to the Intl. Federation of the Phonographic Industry.

However, legal digital sales of singles grew 154% in the first six months of 2005 as 148.7 million singles were downloaded, compared with 58.6 million in the first half of 2004. Downloads of full-length albums hit 5.1 million in 2005; in ’04, 1.5 million full-length albums were downloaded in the same period.

Total estimated retail value of digital singles and albums sold in the first half of 2005 was $198 million, compared with $73 million for the first half of 2004.

Worldwide, the IFPI reported, digital music sales totaled $790 million in the first half of the year, compared with $220 million in the same period a year earlier. The digital boom was largely driven by sales in the top five markets — the U.S., Britain, Japan, Germany and France.

“Even as we continue to transform ourselves and transition to the digital marketplace, the music community is still suffering enormously from the impact of various forms of music theft,” said Mitch Bainwol, chairman and CEO of the RIAA. “We are encouraged by the growth of the digital music marketplace.”

A study by the NPD Group found that “burned CDs” accounted for 29% of music obtained by listeners in 2004. Among households with Internet access that are burning CDs, 17% are burning more than 10 CDs per month. Record store sales, according to Nielsen SoundScan, of the top 200 albums declined to 93 million units from 102.8 million in the first half of ’05.

The RIAA in recent years has sued individuals who heavily use P2P services and, through informational campaigns and lawsuits, has raised awareness about the legal download issue. A June study found that the percentage of adults who have paid to download music legally is now higher than the number of adults who have downloaded music from an illegal peer-to-peer network — 13% to 12%.

Other studies have found that the RIAA and MPAA’s campaigns against piracy have had no impact on traffic on the top P2P networks, especially the fast growing BitTorrent.

The issue of limiting CD burning is likely to become a new legal battlefield. The RIAA’s declaration may be seen as an opening salvo in that approaching war.

IFPI chairman and CEO John Kennedy said, “Our industry’s priorities are to further grow this emerging digital music business while stepping up our efforts to protect it from copyright theft.”

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