Sales of music via the Internet and mobile phones proliferated and spread across the world in 2005, generating sales of US$1.1 billion for record companies - up from US$380 million the previous year - and promising further significant growth in the coming year. The findings have been released in IFPI's Digital Music Report 2006, a comprehensive review of the development of the digital music market internationally.
Music fans downloaded 420 million single tracks from the Internet last year - twenty times more than two years earlier - while the volume of music licensed by record companies doubled to over 2 million songs. Digital music now accounts for about 6% of record companies' revenues, up from practically zero two years ago.
The legitimate digital music business is steadily pushing back on digital piracy. In Europe's two biggest digital markets, UK and Germany, new IFPI research indicates more music fans are legally downloading music than illegally file-swapping.
The Digital Music Report shows how music is helping drive economic activity worth tens of billion of dollars and assesses the impact of the educational and enforcement actions taken by the music industry in 2005.
IFPI Chairman and CEO John Kennedy said,
"Two years ago, few could have predicted the extraordinary developments we are seeing in the digital music business today. And there will be further significant growth in 2006 as the digital music market continues to take shape.
"Already in the UK and Germany - two of the biggest digital markets worldwide - legal buyers from sites like iTunes, Musicload and MSN actually exceed illegal file-swappers. We expect this trend to spread as new and pioneering legal music distribution channels open up to consumers. The challenges we now face are far too big for any complacency, however. In particular we need more cooperation from service providers and music distributors, to help protect intellectual property and contain piracy. It is not enough that they share in the success of the digital music business - they need to take on their share of the responsibilities as well."
A series of court judgements against unauthorised file-sharing services in late 2005 - in the US, Australia, Taiwan and Korea - has helped transform the market environment for digital music and consumer attitudes to illegal file-sharing. Illegal activity on peer-to-peer networks has stayed static in the last year in comparison to a 26% increase in broadband use.
Shifting illegal file-sharers to legal digital services is, however, a long-term challenge. The research indicates that legal downloaders are a more likely to be starting from scratch than migrating from unauthorised sites. Only one in five legal music downloaders is also an illegal file-swapper, underlining the vital role of consumer education and marketing in the new legal music market.
Actions against illegal file-sharing, which in 2005 were extended to nearly 20,000 cases against uploaders in 17 countries, will be stepped up and spread to new countries in 2006.
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