Digital downloads get an upgrade

Paid-for downloaded tracks quadruple

Digital music became serious business in 2004, as the number of legal downloads increased tenfold in the U.S. and Europe to more than 200 million.

The number of Internet musicstores increased to more than 230 last year from 50 in 2003, according to a report from the Intl. Federation of Phonographic Industries.

Data from Jupiter Research included in the report found that the size of the digital music market in the U.S. alone was $330 million in 2004. That figure is expected to double this year.

Legal downloads in 2004 include 140 million songs and albums in the U.S. and 60 million in Europe, including 6 million in the U.K. and 1 million in Germany.

In addition to downloads to computers and portable devices like iPods popular in the U.S., IFPI’s report also included music sales on mobile phones, a popular market in Europe that hasn’t really been tapped yet Stateside.

“The improvement in the digital music market in the past year has been fantastic, and it’s a real shot in the arm for the music industry,” said IFPI chairman-CEO John Kennedy. “We made real progress during 2004, as it’s now a serious market and a real viable business.”

Despite the encouraging signs, more needs to be done to promote legal downloading and to fight the still massive problem of Internet piracy, according to the report. IFPI and its affiliates have initiated more than 7,000 legal actions against alleged Internet pirates in Austria, Canada, Denmark, France, Germany, Italy, U.K. and the U.S. Many more cases in more countries will be instigated in 2005.

At the same time, many independent studies have found that activity on the P2P networks where piracy takes place, particularly the fast-growing BitTorrent network, has continued to grow in the past year.

Kennedy said the record industry’s priority is to license music, but he plays down criticism that companies have been slow to do this.

“The record industry has always been very good at licensing, but in this arena it has quite rightly taken its time as it wants to make sure the artists, writers and copyright owners are paid and there is proper protection.

“I am confident that in 12 months’ time, the digital music market will have grown very significantly around the world. A sector that now accounts for a very small percentage of the industry’s revenues is poised for takeoff in the next few years.”