Digital music sales grow during first half

While digital music sales were up during the first half, a decline in physical music sales led to an overall decline in total music sales

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 (IFPI).

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

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

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 said. In Japan, mobile music downloads account for 85 percent of digital music sales. However, the IFPI includes master ringtones, ringback tunes and music videos along with full song downloads in its overall mobile music sales figures.

Worldwide, master ringtone downloads made up 32 percent of all digital music sales, according to the IFPI.

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

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

Growth in physical music sales was a mixed bag during the half-year. Japan recorded a 12 percent increase while France had a 9 percent decrease and the U.S. had a decrease of 7 percent. Overall, physical music sales declined by 10 percent worldwide, leading to a four percent 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 said.

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.

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Nancy Gohring

IDG News Service
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