Digital Music Sales Up 25 Percent

    January 19, 2009

The digital music business saw solid global expansion in 2008, growing by an estimated 25 percent to $3.7 billion, according to a report from the industry trade group IFPI.

Digital platforms now account for around 20 percent of recorded music sales, up from 15 percent in 2007. Despite this the music industry is still plagued by large amounts of unlicensed music distributed online. The IFPI estimates over 40 billion files were illegally shared in 2008, giving piracy a rate of about 95 percent.

Single track downloads were up 24 percent in 2008 to 1.4 billion worldwide, while digital albums were up 36 percent.

Digital Music Sales Up 25 Percent
John Kennedy

"The recorded music industry is reinventing itself and its business models," said John Kennedy, chairman and chief executive of IFPI.

"Music companies have changed their whole approach to doing business, reshaped their operations and responded to the dramatic transformation in the way music is distributed and consumed."

Advertising supported services that are free to users are also opening up. One of the highest-profile launches was MySpace Music in the U.S. in September 2008. Several major music companies have also signed licensing agreements with YouTube.

Music companies are also increasingly licensing music to third parties. One area of success is the games market, where music games were responsible for 15 percent of overall game sales in the U.S. in the first half of 2008 (NPD Group). Guitar Hero and its sequels have sold more than 23 million copies in three years, generating more than $1 billion in North America.

"There is a momentous debate going on about the environment on which our business, and all the people working in it, depends," said Kennedy.

"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."