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A Fuller Picture on Global Music Sales
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2003-04-10
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The IFPI, which represents the worldwide record industry, released its music sales figures and the news was unsurprisingly bad. Recorded music fell by 7% in value and 8% in units for 2002, with worldwide CD sales falling 6%. But a closer analysis of the numbers paints a more complex picture than the all-too-familiar scapegoat of "mass downloading from unauthorized file sharing on the internet and the massive proliferation of CD burning."

The first issue is how significant the reductions are within the context of the present economy. There is clearly a downturn in the global economy that is affecting sectors across the board and reducing consumers disposal income while they attempt to shore up their savings during uncertain times. In this context, it is impossible to determine what portion of the 6% decrease in CD sales is attributable to the present economic climate rather than infringing activity.

Of course, the rest of the entertainment industry is facing far rosier times and this was reflected in music video sales, which grew by 12% in units and 9% in value, "driven by strong growth in DVD." This is a point I tried to make in my April 3rd editorial: "since there are no longer distinct entertainment products but converged ones, music can grow as other media sectors and products grow."

Another problem is that we are looking at the numbers with blinders. When IFPI states: "An estimated 236 million CD-Rs were burned in 2002, while legitimate CD sales were 229 million," and states that the Japanese market fell 9%, I ask myself what exactly does this mean? First, it's obvious that every burned CD is not replacing a legitimate one, otherwise the market would have fallen 90%. But more importantly, it gives an indication that the potential Japanese market is much larger than 2002's 229 million units, by maybe 100-150 million units if long overdue reductions in CD retail prices were implemented. I would contend that several of those 236 million burned CDs would have been purchased ones if the retail price were cut by say 40%. Maybe a significant portion of the burned albums would have included music legally purchased online if a song were priced at 50 versus $1.49.

Finally, France & the UK continue to present a thorn in the industry's arguments. Being in Paris, I can tell you that everyone is very aware of KaZaa, have CD burners and even increasingly broadband. I have not noticed any particular reservation to downloading-&-burning among the acquaintances I've made over the months. And in fact, the French organizations representing the industry are far less vocal (at least, they don't make headlines) or litigious than their US counterparts.

Yet, the world's fourth largest music market recorded a 4% growth in unit sales, "largely attributable to the continued growth in sales of French repertoire." Have the French found some magic way to make their repertoire impervious to ripping? Has KaZaa banned French music from its system? Or is it simply that France has managed to preserve the value and appeal of their music, not allowing it to be Americanized out of Gallic pride? As for the UK. while 2002 ended its "five-year growth run," unit sales fell a relatively small 3%.

I'm not saying that the illegal ripping-downloading-file sharing-burning of music is not having an impact on the industry's business. But it serves no one to scapegoat the problem rather than analyzing the full spectrum of factors shaping the industry.

Related News from Mi2N:
» Global Sales Of Recorded Music Down 7% In 2002


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