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Digital dischord dings music biz

Music sales slip $7 mil

The retail value of the music industry slipped $7 million last year to $12.27 billion, according to the RIAA, which has brought new math to the record biz.

The Recording Industry Assn. of America traditionally tracks shipments of records and CDs to retail outlets, but has had to reconfigure the way it does its calculations due to the digital age, taking sales into consideration. Org has determined the overall approximate wholesale value is $7 billion.

For physical products, counting all formats (CD, DVD, cassette, LP) and all distribution channels, unit shipments decreased by 8% in 2005: 749 million units vs. 814 million a year earlier. Nielsen SoundScan reported 619 million units were sold in ’05, meaning 130 million units are either in shops or warehoused.

According to the RIAA, 1.9 million musicvideos were sold online for an estimated retail value of $3.7 million.

Org’s totals in the digital arena differed from those posted by SoundScan in January. The RIAA reports 366.9 million digital singles were sold last year vs. SoundScan’s 352.7 million; digital album sales hit 16.2 million per the industry org, while SoundScan had the tally at 13.6 million. The RIAA figures mean 6.5% of all album and album equivalents — 10 songs purchased as digital singles — are delivered digitally.

In previous years, the difference between RIAA and SoundScan figures stemmed from measuring shipments vs. actual sales. Since there is no physical product involved in Internet music sales, the difference this year owes to SoundScan not tracking every online service and the RIAA relying on record label reports.

Mobile formats — ringtones, ringbacks and other artist-related content — shipped 170 million units. The RIAA said that represents $421.6 million in retail value, though that would work out to an average purchase of $2.48 per recording. Most are sold for between 99¢ and $1.99.

Adding to the industry’s bottom line are the approximately 1.3 million fans paying for music subscription series. According to data from the NPD Group, an all-time high of 4.2% of Internet-connected households used a legal online music service in December.

While issuing sweeping statements about piracy, the RIAA did not offer any details on the economic dent it is making in the industry.

“We recognize the very real challenges that continue to plague our ability to invest in the next generation of music,” Mitch Bainwol, chairman-CEO of the RIAA, said in a statement. “The Supreme Court’s unanimous Grokster decision was extraordinarily meaningful, but the theft of music in its various forms continues to exact a heavy price.

“The emergence of new digital radio platforms, while exciting and holding great potential, presents new challenges if allowed to morph into download-like services without commensurate compensation,” he added.

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