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'Perfect storm' hits international music industry
By Jon Newton,
(more articles from this author)
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Music Industry News - as it happens
Source: Mi2N - April 16, 2002

"A perfect storm, buffeted by the combined effects of mass copying and piracy, competition from other products and economic downturn," forced global music markets to fall 5% in value and 6.5 % in units in 2001, says a report published by IFPI, the organisation representing the recording industry worldwide.

However, France (up 10%) and the UK (up 5%) significantly bucked the trend with "exceptionally robust sales of domestic artists in 2001, which helped offset the worldwide fall in sales of the biggest international artists." Eighteen of the 20 top-selling albums in France carried French repertoire; in the UK, domestic artists accounted for the top seven best-selling albums last year (see next story).

This news follows a recent announcement by the RIAA (Recording Industry Association of America) saying music unit shipments in the US dropped nearly 10% in 2001 from the previous year.

In the meanwhile, recorded music sales worldwide fell to US$33.7 billion. Sales of CD albums fell globally by 5%, and there were declines in sales of singles (-16%) and cassettes (-10%).

Jay Berman, IFPI chairman and CEO, said: "The industry's problems reflect no fall in the popularity of recorded music: rather, they reflect the fact that the commercial value of music is being widely devalued by mass copying and piracy."

But, he went on, the record industry is responding with new business models, new payment systems and a new legal environment for the future on-line legitimate business, and, "it is acting decisively using anti-copy measures on CDs and internet anti-piracy actions to protect the business that it depends on today. These measures of self-protection are essential to stop the widespread erosion of record producers' and artists' rights."

Three of the world's top five markets - the US, Japan and Germany - attribute a significant part of their sharp drop in recorded music sales in 2001 to the proliferation of free music and piracy, said the IFPI.

The effect was felt on CD sales in most markets in North America, Europe, Latin America and Asia. Declines in market value in 2001 ranged from 4.5% in the US and 9.6% in Canada to 9.2% in Germany, 8.6% in Italy, 9.8% in Austria, 14.8% in Denmark and 9.4% in Japan. The pressure from mass copying was aggravated in many markets by the global economic downturn, particular in the last quarter of the year.

Surveys in the most affected countries, notably the US and Germany, showed that mass copying and internet piracy is directly replacing sales of CDs, the association went on, although, "Sales of domestic artists fared well in many major markets, notably in France, Italy, UK, Spain and Australia. The average share of national markets accounted for by domestic artists has risen 1% a year to 68% over the last decade."

In Germany, 18% of 10,000 consumers surveyed said burning CDs resulted in them buying less music. In the US, nearly 70% of people who downloaded music burned the songs on to a CD-R disc, while 35% of people downloading more than 20 songs per month said they now buy less music as a result.

Three markets with vast populations and among the lowest per capita music consumption rates in the world - China, Russia and India - saw encouraging growth in 2001 on the back of economic improvement. Sales in China grew by 15%; growth in India was 15%, and in Russia 17%.

Many developing markets saw an increase in commercial piracy, driven by the accelerating spread of organised CD-R pirate operations, added the IFPI.

Piracy, combined with economic crises, particularly hit markets in Latin America. The most dramatic impact on legitimate sales occurred in the region's two largest markets, Brazil (down 25%) and Mexico (down 16%). A similar situation exists in parts of Eastern Europe, with Poland down 28%.

Related News from Mi2N:
» Global Music Sales Down 5% In 2001

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