IFPI 05: digital music report

MMusic on the internet and mobile phones is moving into the mainstream of consumer life, with legal download sites spreading internationally, more users buying songs in digital format and record companies achieving their first significant revenues from online sales.

These are the conclusions of the IFPI Digital Music Report 2005, a comprehensive review of the music industry's digital strategies and of the fast-emerging market for online and mobile music distribution. The report is published today (Jan-05) by IFPI on behalf of its more than 1,450 member record companies across the world.

Music fans downloaded well over 200 million tracks in 2004 in the US and Europe - up from about 20 million in 2003. This helped bring record companies their first year of significant revenues from digital sales, running into several hundred million dollars. Analyst Jupiter estimates that the digital music market was worth US$330 million in 2004, and is expecting it to double in value in 2005.

The supply of music available digitally is proliferating. The number of online sites where consumers can buy music legally has now hit more than 230, up from 50 a year ago, with record companies licensing the bulk of their active catalogue for download, totalling over one million songs - more than doubling the amount of available repertoire within one year. Services like iTunes and Napster have become household names internationally, and many other national sites are specialising in local repertoire.

Portable players, led by the hugely successful iPod, and mobile phones, are helping transform the consumer experience of enjoying music and creating new revenue opportunities. There are estimates that 50% of mobile content revenues will be from music.

The report highlights the industry's international campaign to help promote the legal download market - including a national 'Download Me Legally' campaign by artists in France, an online campaign advert 'The Drummer' promoting legitimate sites across Europe and the pro-music information campaign directing music fans to 230 download websites in over 30 countries.

It indicates that consumer attitudes to digital music are changing, with a new survey in six European countries (Denmark, France, Germany, Italy, Austria, UK) showing that nearly one in three music downloaders intend to buy from legal music services in the coming months (31% compared to 22% currently).

Despite the encouraging signs for the future, the report makes clear that much more needs to be done both to promote the digital music business and to fight the huge problem of internet piracy. Music downloading is still in its infancy, with less than one in ten people downloading songs and only one person in two, in the key 16-29 age group, aware of the existence of legal ways of buying music online.

Digital piracy remains a very significant problem, but the recording industry's campaign of legal actions against music uploaders is helping contain it. Consumer awareness of the illegality of unauthorised file-sharing remains very high (seven people out of 10) compared to before the enforcement actions began. The supply of music files on unlicensed P2P services has fallen over the last year. The total number of infringing music files on the internet in January 2005 is slightly down on one year ago at 870 million tracks, and this is despite a huge increase in the use of broadband internationally.

The report reviews the progress of more than 7,000 legal actions launched so far against alleged illegal uploaders in eight countries (Austria, Canada, Denmark, France, Germany, Italy, UK, US), and makes clear there will be many cases launched in more countries in 2005. Uploaders facing the threat of litigation are now regularly paying settlement fees averaging several thousand euros in Denmark, Germany and Austria.

John Kennedy, IFPI Chairman and CEO said: "The biggest challenge for the digital music business has always been to make music easier to buy than to steal. At the start of 2005, as the legitimate digital music business moves into the mainstream of consumer life, that ambition is turning into reality."

"The record industry's priority now is to licence music - to as many services, for as many consumers, on as many formats and devices for use in as many places and countries as it can. The straightforward conditions are that the business must be legitimate, the music must be correctly licensed, and record companies and other rights holders must get properly paid."

"I am confident that in twelve 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 take-off in the next few years. At long last the threat has become the opportunity."

Full document here, within IFPI's website.