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IFPI Digital Report 2010 – The Sky is Falling, Again
January 21, 2010
We’ve been reading the IFPI’s Digital Music Report since publication began in 2004. Every year, it presents a fascinating insight into the complex world of digital music and the marketing struggles the entertainment industry faces. Although the situation appeared to be turning around for the music industry between 2006-2008, when the RIAA’s Mitch Bainwol declared that P2P piracy had been “contained”, things only seem to be getting worse – or at least that’s what the music industry wants us to believe.The latest Digital Music report contained plenty of information and stats on digital music sales around the world. But what was particularly striking was the repetitive theme of demanding ISP/legislative involvement to solve the issue digital piracy. In many ways, this is the last stand of the music industry. Almost all other attempts to stop file-sharing, such as shutting down Napster, flooding networks with corrupt files, suing customers, educating customers, etc, has failed miserably. All that’s left is the ISP.
Why is the music industry pushing so hard for ISP/legislative intervention? Because it’s very survival is at stake. If we are to believe the IFPI’s statistics, fewer and fewer dollars are being spent investing on new artists. It’s no secret that the CD market has all but collapsed thanks to the shift towards digital music. The music industry is under the impression that that only thing driving the file-sharing community is the lure of free music. However, this is hardly the case as it’s an incubator for new technologies (such as BitTorrent, DHT, advanced networking, etc). It’s also a place that millions call home, where a sophisticated culture has grown since the earliest days of P2P. It’s likely that some people simply engage in file-sharing just to save a few bucks, but to give a carte blanche declaration that free is the only motivation (especially with mounting evidence that many P2Pers also buy music and drive the industry) is disingenuous. It’s not free file-sharing that individuals are defending; there’s something much more driving the motivation of the P2P community.
The IFPI 2010 Digital Music Report was no doubt one of their most dire written, but they did manage to report some good news. According to the report, in “2009, for the first time ever, more than a quarter of the recorded music industry’s global revenues (27%) came from digital channels – a market worth an estimated US$4.2 billion in trade value, up 12 per cent on 2008.” Additionally the IFPI found that music sales had risen substantially in Sweden, a success attributable the recent Ipred laws and the court decision against The Pirate Bay.
“Sweden was up by 10.2 per cent in 2009. Growth was driven by an 98.6 per cent increase in the digital market and a 1.9 per cent rise in physical format sales.”
But the even the IFPI treads lightly on these numbers. Music sales are shrinking rapidly and digital sales only represent one small growing segment in an otherwise deteriorating market. In other words, digital sales are impressive, but there simply isn’t enough to make up for the near abandonment of the CD market.
“Music companies’ global digital revenues grew by an estimated 12 per cent in 2009 totaling US$ 4.2 billion in trade revenues. Digital channels now account for 27 per cent of music sales, up from 21 per cent in 2008 (IFPI).”
iTunes and the plethora of other digital music store options have done much to soften the crippling of the music industry, but obviously it hasn’t been nearly enough. Sure, iTunes may sell billions of tracks over the course of 5 years, but billions of files are being traded via file-sharing over the course of a month.
The problem the IFPI and the rest of the music industry is the authorized music store option is becoming saturated. Growth is slowing for many reasons – and the global recession isn’t helping. The music industry is pointing to their declining sales, but in this economy, who is actually posting positive numbers? Not many. Reviving the digital market is key if the music industry wants to survive into the 21st century, but we can’t help but feel that forcing ISPs via legislation is not the way to go. People are already sick of the lack of mutuality and deprivation of fair use rights, and it’s likely that if “Three Strikes” becomes a reality, this will only fuel the technological arms race that benefits the file-sharing community.
The music industry warns us that if nothing is done, the industry as we know it will collapse and the consumer will suffer. However, music has been engrained into human culture since we first began singing and playing instruments. It’s unlikely this trend will end any time soon. The music industry in its current iteration is merely a means to an end. Remove the means, and the vacuum will be filled. When Rome fell, Europe went through some tough times, but in the end, it was better for it.
But the even the IFPI treads lightly on these numbers. Music sales are shrinking rapidly and digital sales only represent one small growing segment in an otherwise deteriorating market. In other words, digital sales are impressive, but there simply isn’t enough to make up for the near abandonment of the CD market.
“Music companies’ global digital revenues grew by an estimated 12 per cent in 2009 totaling US$ 4.2 billion in trade revenues. Digital channels now account for 27 per cent of music sales, up from 21 per cent in 2008 (IFPI).”
iTunes and the plethora of other digital music store options have done much to soften the crippling of the music industry, but obviously it hasn’t been nearly enough. Sure, iTunes may sell billions of tracks over the course of 5 years, but billions of files are being traded via file-sharing over the course of a month.
The problem the IFPI and the rest of the music industry is the authorized music store option is becoming saturated. Growth is slowing for many reasons – and the global recession isn’t helping. The music industry is pointing to their declining sales, but in this economy, who is actually posting positive numbers? Not many. Reviving the digital market is key if the music industry wants to survive into the 21st century, but we can’t help but feel that forcing ISPs via legislation is not the way to go. People are already sick of the lack of mutuality and deprivation of fair use rights, and it’s likely that if “Three Strikes” becomes a reality, this will only fuel the technological arms race that benefits the file-sharing community.
The music industry warns us that if nothing is done, the industry as we know it will collapse and the consumer will suffer. However, music has been engrained into human culture since we first began singing and playing instruments. It’s unlikely this trend will end any time soon. The music industry in its current iteration is merely a means to an end. Remove the means, and the vacuum will be filled. When Rome fell, Europe went through some tough times, but in the end, it was better for it.
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