With music sales falling worldwide and CD piracy on the rise these would appear to be bleak times for the music industry. Norah Jones was a big seller in 2002 |
Global music sales are down by 7% on 2001, hit by CD piracy and online music sharing, according to industry body the International Federation of the Phonographic Industry (IFPI). An estimated 900 million music files are available for download every day without a single penny ending up in the pockets of artists or the record companies.
And latest figures show as many CDs are copied as are sold.
But Keith Jopling, director of market research at the IFPI, admitted it will "get worse before it gets better".
'Transition'
"Last year we said it was at the start of a transitional phase when sales were down 5%.
 Music companies have got to create a product that will appeal to a younger market  |
"This is the second year of that transition. Undoubtedly we will see 2003 as part of that." Critics of the music industry complain many of the problems are self-inflicted.
They say the industry is out of touch with consumers, charges too much for CDs and online services and imposes singers and bands on the public with little talent.
Downturn
Music sales are falling, critics argue, because the public is not interested in listening to the latest Britney or Blue clones.
State of the industry World music sales totalled $32bn in 2002 Global piracy was worth $4.3bn in 2001 Almost 40% of all CDs and cassettes sold around the globe are pirated copies In 2001, 28% of all CDs sold were pirate copies Source: IFPI |
On a more positive note for the industry, music videos saw a growth in value of 9%, driven by strong growth in DVD.
"That growth is set to continue," said Jopling.
But the industry says there are other reasons for a downturn in sales, citing the growing competition from other sections of the entertainment industry, including films on DVD and video games.
And it admits it will not see a change in its fortunes for a while yet.
"In 2004 we may start to turn a corner, particularly through online," said Jopling.
The increased take-up of broadband, which allows more information to be exchanged online at faster speeds, and the growth in DVD copying will all have a deleterious effect on sales, said Jopling.
DVD has 10 times the data storage capacity of CD-R and is set to overtake the CD-R as the world's primary recording media by 2006, according to latest figures.
The IFPI also warns that piracy rates will increase when the EU enlarges to include countries with an average piracy rate of 50%.
The next two years are undoubtedly crucial for the music industry as the battle to keep profits up and sales healthy is fought along three fronts.
Music labels are working with the internet to offer paid-for services Governments are being persuaded to crack down on piracy and to protect copyright Technology which makes copying of CDs and sharing of files on the internet more difficult is being introduced. "Music companies are securing revenue streams, other than the CD," said Jopling.
"We will know whether or not we have a legitimate online market for music in 12 to 18 months," he added.
'Proved'
Ironically, the rampant growth in downloading music without paying for it has proved one thing to record companies - music lovers are willing to get their music online.
"It proved there is an online market for consumption of music. What is still unproven is how much they are willing to pay.
"We do know there is a good chunk of people willing to pay for music of good quality.
"Companies have been a bit slow to understand the change in the market."
But he said the task of putting paid-for music online was a complicated process.
"Music companies have got to create a product that will appeal to a younger market."
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