Thursday, December 28, 2006

Digital music sales grow during first half

Digital music sales continue to grow, in revenue and as a percentage of overall music sales, according to research from the International Federation of the Phonographic Industry.

During the first half of the year, digital music sales grew 106% compared with the same period last year to reach US$945 million. Digital sales now account for 11% of the recorded music market worldwide, up from 5.5% in December 2005.

While still a small portion of overall sales, mobile song downloads have grown unexpectedly, says Gabriella Lopes, a senior analyst for the IFPI. In December, mobile song downloads accounted for 3% of digital music sales but during the first half of this year they made up 6% of digital sales, she says.

Mobile song downloads are popular in places like Japan where customers use the latest mobile phones that include music players and where they have access to high-speed wireless networks to enable fast downloads of songs, she says. In Japan, mobile music downloads account for 85% of digital music sales. However, the IFPI includes master ring tones, ring-back tunes and music videos along with full song downloads in its overall mobile music sales figures.

Worldwide, master ring-tone downloads made up 32% of all digital music sales, according to the IFPI.

Online single track downloads also accounted for 32% of sales, followed by full albums with 15%. Subscriptions made up 7% of digital music sales for the half-year.

Koreans are some of the most avid digital music consumers, with 51% of music sales there coming from digital sales. In the United States, 18% of music sales were made through digital channels in the first half of the year, accounting for $513 million in sales.

Growth in physical music sales was a mixed bag during the half-year. Japan recorded a 12% increase while France had a 9% decrease and the United States had a decrease of 7%. Overall, physical music sales declined by 10% worldwide, leading to a 4% decline in total music sales for the half-year.

The IFPI blames piracy and competition for consumer spending for the decline in sales. The music industry is competing for young people's cash with other products like clothing, mobile phones, games and other entertainment products, Lopes says.

The music industry has won several high-profile cases recently to close down Web sites that help consumers illegally share copyright music without benefiting the copyright owners. But piracy continues to compete for legitimate music sales, the IFPI said.