Music Ally

Music industry body the IFPI claims that more than 40 billion songs were illegally downloaded in 2008 – 95% of all music downloads.

The figures have just been revealed in its annual IFPI Digital Music Report, which presents them as further proof that ISPs should be co-operating more closely with the music industry to clamp down on piracy. That 40 billion figure is based on collating separate studies from 16 countries over a three-year period, apparently, with France and Spain singled out as being affected particularly badly by online piracy.

How about the positive side? Well, digital music generated $3.7 billion of trade revenues in 2008, up 25% year-on-year. The problem is that this growth is pretty poor, given the continued decline in physical revenues – digital’s share of overall recorded sales has risen, but only from 15% to 20% from 2007 to 2008.

It’s all very well to trumpet the fact that more than 1.4 billion legal single-tracks were downloaded in 2008, as the IFPI does, but if they cost 79 cents each and are eating into the market share of physical albums, it’s clear the transition from physical to digital is still proving thorny. Still, Lil Wayne is doing well out of it: his Lollipop single sold 9.1 million downloads in 2008.

Meanwhile, the message coming from the IFPI is that the music industry is “reinventing itself and its business models” with services like Nokia’s Comes With Music, MySpace Music and TDC’s Play. Here, too, there are questions though. Comes With Music hasn’t got off to the best start, while opinions are mixed on just how much revenue the many new business models are really going to generate, and how soon.

Nevertheless, the not-so-unspoken notion that ‘we’ve moved with the times, now you ISPs need to fall into line’ is clear in the report. Or, as IFPI boss John Kennedy puts it:

“There is a momentous debate going on about the environment on which our business, and all the people working in it, depends. Governments are beginning to accept that, in the debate over “free content” and engaging ISPs in protecting intellectual property rights, doing nothing is not an option if there is to be a future for commercial digital content.”

The report highlights moves in France – with the Creation and Internet law and its ‘three strikes’ policy – and the UK’s Memorandum of Understanding between the ISPs and the film and music industries as big steps forward, but also citing discussions in New Zealand, the US, Italy, Australia, Japan, Hong Kong and South Korea.

Here, too, there is plenty of uncertainty about what exactly ISPs will be prepared to do – sending warning letters out is one thing, but actually disconnecting customers another. Governments may be stepping in, but they’re finding that mediating between the music industry and the ISPs may be a more difficult task than they thought.

Still, some industry bullishness did rear its head in a conference call held yesterday to discuss the IFPI’s report. The choice quote came from Universal Music Group’s Rob Wells, who said that “when there is no need to own, this will have an effect on piracy”, before claiming that “in five years’ time the music industry will be larger than it has ever been”. Tell that to the startups trying to make the no-need-to-own model work despite punitive licensing demands from the labels.

We’re not ragging on the report (and Wells) for the sake of it. Like everyone in the industry, we welcome the continued growth of digital music and the launch of innovative new business models. But whether digital is growing fast enough, and whether those new business models are being truly encouraged to flower, are well worth debating.

Here’s some key statistics from the report.

Tags: digital music, ifpi

This entry was posted on Friday, January 16th, 2009 at 7:00 am and is filed under Digital Music News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.