Low note for music biz

Late recovery saves industry from even higher falls

This article was updated at 6:45 p.m.

LONDON – Worldwide music sales figures for 2003 were not pretty: The value of sales of recorded music fell 7.6% to $32 billion. Unit sales were down 6.5% to 2.7 billion across all formats. Only the U.K. posted improved year-to-year numbers.

Things could have been worse, if it were not for the recovery in the U.S. and continued strength in the U.K. markets, according to figures released by the Intl. Federation of the Phonographic Industry (IFPI).

As usual, digital and physical piracy were blamed for global music sales slumping for a fourth consecutive year.

The market was off 12% by mid-year in the U.S., the world’s biggest music market. However, a strong second half resulted in a year-end figure of $11.84 billion, down just 6% on 2002. That recovery was aided by increasing CD album sales, in particular by OutKast, Toby Keith, Hillary Duff, Ludacris, R.E.M., Alicia Keys and Clay Aiken.

IFPI says that the U.S. recovery, which accounts for 37% of the global market, has continued this year.

Second-place Japan saw the value of sales slump 9.2% to $4.9 billion.

The U.K., the third biggest market, upped its global share by a point to 10%. CD album sales were especially strong in the fourth quarter, resulting in an overall increase of 5.6% in unit terms, with 1.4% value growth. Sales netted $3.21 billion.

Other welcome news for the beleaguered music sector: While audio sales continue to fall, down 9.9% in value in 2003, the musicvideo biz continues to prosper.

Video sales grew 46.6% in 2003 thanks to a 67% sales rise in music DVDs. DVD musicvideo now accounts for 5.7% of global music retail revenue compared to 3.1% in 2002.

“Global music sales had another difficult year in 2003, under the combined effects of digital and physical piracy and competition from other entertainment products,” IFPI chairman Jay Berman said. “However, there are some encouraging signs, particularly in the U.S. market.”

Elsewhere, there were less encouraging signs. In Europe, the two biggest continental markets suffered. Fourth in the world rankings, France saw a heavy 14.4% decline in sales to $2.11 billion but remained ahead of Germany, where the music industry suffered its worst year to date with a 19% drop in value to just over $2 billion.

Sixth-place Canada saw a drop of 2.9% to $676 million; seventh-place Australia was up 5.9% to $674 million; eighth-place Italy dropped 4.4% to $645 million; Spain, in ninth, was down 9.4% to $596 million; and the Netherlands fell 5.15% to $499 million.

For the first time there is no Latin American market among the top 10, with sales in both Mexico and Brazil sharply hit by economic downturn and rampant CD piracy in recent years.

Denmark, France, Sweden, Belgium, Greece, Ireland, Portugal and Switzerland also experienced double digit declines. The industry has suffered global losses of 20% since 2000.

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