Digital music’s triple play

Downloads generate $1.1 bil biz

Digital downloads worldwide generated $1.1 billion for record companies last year, nearly tripling the revenue recorded in 2004.

IFPI’s Digital Music Report 2006 shows that 420 million single tracks were purchased from Internet services last year, while the volume of music licensed by record companies doubled to more than 2 million songs.

Digital music now accounts for about 6% of record companies’ revenues. Song downloads to mobile phone accounts rep some 40% of record company digital revs worldwide.

Record companies are seeing sharply increased sales of true-tones — i.e., excerpts of recordings — which account for the bulk of their $400 million-plus mobile music revenues.

“A new wave of digital commerce, from mobile to broadband, is rolling out across the world,” IFPI chairman-CEO John Kennedy said. “It is generating billions of dollars in revenues, and it is being driven, to a large extent, by music.

“The challenges we now face are far too big for any complacency, however. In particular, we need more cooperation from service providers and music distributors to help protect intellectual property and contain piracy. It is not enough that they share in the success of the digital music business — they need to take on their share of the responsibilities as well.”

Org said the music biz needs support for Digital Rights Management, which is the key enabler of digital music services allowing new and flexible uses by consumers. It also needs more cooperation from Internet service providers in protecting music from piracy on their networks.

Advancements in stemming piracy were made in several countries. In Europe’s two biggest digital markets, the U.K. and Germany, IFPI research indicates more music fans are legally downloading music than illegally file-swapping.

And a series of court judgments against unauthorized file-sharing services in the U.S., Australia, Taiwan and Korea helped transform the market environment for digital music and consumer attitudes to illegal file-sharing. Illegal activity on peer-to-peer networks has stayed static in the last year in comparison to a 26% increase in broadband use. Only one in five legal music downloaders is also an illegal file-swapper.

Other milestones the IFPI noted:

  • In Japan, the most developed mobile music market, mobile sales reached $211 million, representing 96% of all digital music sales, for the first quarter of the year.

  • Globally, there are now more than 335 legal download sites, up from 50 two years ago. New music services arrived for the first time in 2005 in Argentina and China.

  • Online song catalogs doubled, with more than 2 million tracks and 165,000 albums available on the major services.

  • British artist James Blunt topped the first European digital song downloads chart with “You’re Beautiful.”

The IFPI comprises more than 1,400 major and independent music companies from more than 70 countries.

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