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IFPI Online Music Report, 2004
By Jon Newton,
(more articles from this author)
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The IFPI (International Federation of Phonographic Industry) is the major record labels' international trade organ which, every once in a while, issues 'reports' on the state of the industry.

The reports are always so wildly self-serving and so badly skewed as to bear little resemblance to what's actually happening in the world of music. But the latest effort - IFPI Online Music Report 2004 - is even worse than usual.

It's presented as 'the recording industry's first comprehensive global progress report on the growth of legitimate online music business'. Actually, it's a marketing / sales brochure from the Big Five to prop up the various online music stores that are popping up all over like mushrooms.

Leading off with "the campaign against illegal music file-swapping making a clear impact across the world," the report purports to show that 'legal' online music taking off internationally in 2004, "following on the success of services such as Apple iTunes, Napster and Rhapsody in the USA".

Both statements are, however, complete nonsense.

"It's iTunes and the new Napster and Wal-Mart, Amazon, Dell, Real, Microsoft and others versus Kazaa, Imesh and Grokster," says RIAA boss Mitch Bainwol here. "It's whether or not digital music will be enjoyed in a fashion that supports the creative process or one that robs it of its future."

The RIAA (Recording Industry Association of America) and IFPI are components of the music industry's massive propaganda and enforcement machine and Jay Berman, who currently runs the IFPI, was once the RIAA's boss.

Kazaa, Imesh or Grokster are hard-core commercial apps, with everything that implies. But to stack them against "Napster and Wal-Mart, Amazon, Dell, Real, Microsoft and others" is utterly ridiculous.

The truth is - the creative process has nothing to do with the corporate music industry's strategies or thinking, both of which centre solely and exclusively on turning online music into another industry controlled operation - at any cost, up to and including alienating significant portions of what should have been their new customer bases.

The labels are using their tremendous weight and vast financial and political resources to crush anyone and anything who stands in the way of their achieving this. And how can they loose? Many of the people who work for the various print and electronic media outlets may believe they're offering fair and balanced reporting, but frequently, their salaries are directly and indirectly paid by the same entities they're writing about.

That's why reports such as this are printed almost verbatim, in many cases, and are treated as if they come from credible sources.

"Announcements of services outside the USA are expected by those players in the first half of 2004," says the IFP report, speaking of Wal-Mart, et al. "In Europe, some half a million people are already signed up to more than 30 different legal sites," it says. "This figure is expected to rise sharply in 2004 as record companies continue license their catalogue for legitimate distribution online."

The online music store ball is now rolling and there's no way on earth it'll stop. So of course the corporate players will expand from the US into other parts of the world. They have to. Their survival depends on it. What one does, so must they all do. And 500,000 people have signed up? That's paltry and consequently, any increase has to be sharp.

"Consumers [in Europe] can now get music online via a range of payment methods, including paid-for downloads and subscription, from online sites such as MSN Music Club, Virgin Downloads, Tiscali Music Club, HMV Digital Downloads, Fnac, TDC musik, Karstadt and MTV. Demand for these services, powered by the pan-European distributor OD2, rose sharply in 2003."

Let's say you have eight shops lined up in the same mall, all selling potatoes supplied by one huge wholesaler, and at the same price. Individually, the shops aren't going to get much out of it, but the wholesaler - who's supplying them all - can't lose. And the wholesaler spends a LOT on advertising, including renting space in each store.

There's no competition, of course. But the only person to suffer is the customer. So who cares?

That's how things used to be, anyway. And then along came the Net and with it, freedom of choice, competition, a multitude of decentralised shops selling tomatoes and carrots as well as potatoes,

In the meanwhile, "In addition several independent services are planned, such as Germany's cross-industry business-to-business platform Phonoline, which will launch in early 2004 with 250,000 tracks available."

Phonoline? Independent service?

The truth is: Phonoline is a subsidiary of the German Phonographic Industry Association. In effect, it's a catalogue distribution point owned by the Big Five - Universal Music, Sony Music, Warner Music, BMG and EMI with Deutsche Telekom as the technology partner. And only 250,00 tracks?

"New figures also show that the industry's campaigns against illegal file-swapping have sharply raised public awareness both in the US and in Europe. In a new IFPI-commissioned survey of consumers in four major European markets - Denmark, France, Germany and UK - more than two thirds of respondents are aware that distributing music online without permission is illegal."

Commissioned by the IFPI, eh? That's reassuring. Be that as it may, certainly, the RIAA's sue 'em all campaign and its ongoing coverage by largely industry owned and/or supported media has raised public awareness. However, its American sue 'em all campaign is out of all proportion to the perceived wrongs, and whether or not it's in the interests of Big Music's shareholders over the long term remains to be seen.

And distributing music online without permission is not illegal. It never has been. It never will be.

IFPI boss Berman says: "For everyone working to create a successful legitimate online music business, this report reflects a new sense of optimism and evidence of real change."

However, the reverse is true. The industry, fronted by Berman, the RIAA's Cary Sherman and all the rest of the music industry trade organs and their bought-and-paid-for political supporters around the world, is desperately trying to maintain the status quo.

Real change is the very last thing it wants.

"We believe the music industry's internet strategy is now turning the corner, and that in 2004 there will be, for the first time, a substantial migration of consumers from unauthorised free services to the legitimate alternatives that our industry is providing internationally," Berman adds.

Dream on, Mr Berman. Dream on.

And while the Big Five try to give legitimacy to the corporate Net music stores, there are plenty of genuine online offerings featuring music from different performers and cultures around the world - not just a manufactured few from the UK and USA.

Moreover, pricing varies and business models are purpose-designed to be mutually beneficial to both seller and buyer.

A while back, we published a list from, and we've copied it below. And there are plenty more where that came from.

Home » News Beat » IFPI Online Music Report, 2004
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