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IFPI says digital sales are not offsetting piracy

"[It is] very encouraging that some markets such as Japan [have] already achieved that target [of digital music sales making up for the decline in CD sales]."

John Kennedy, head of the International Federation of the Phonographic Industry

Digital music sales via the Internet and through mobile phones surged about 40 percent worldwide last year, as music companies try to make up for a decline in CD sales.

Global digital music sales probably reached US$2.9 billion last year, up from US$2.1 billion a year earlier, the International Federation of the Phonographic Industry (IFPI) said in an e-mailed copy of its annual report yesterday. The overall music market shrank about 10 percent as the growth in digital sales didn't offset a ``sharp'' fall in CD sales, the federation's chief John Kennedy said in a phone interview yesterday.

Digital sales now account for about 15 percent of the global music market, up from 11 percent in 2006 and almost zero in 2003. In the US, the world's biggest digital music market, online and mobile sales now account for 30 percent of all revenue.

Music companies are trying to stem piracy and illegal downloading of songs with digital offerings to convince consumers to pay for downloads via mobile phones and the Internet. There are now more than 500 legitimate digital music services such as Apple Inc's iTunes online store, offering more than 6 million tracks, the IFPI said yesterday.

The federation compiled for the first time a global music download sales chart, which was topped by Avril Lavigne last year. She sold 7.3 million track downloads of Girlfriend, followed by Utada Hikaru's Flavor of Life with 7.2 million and Rihanna's Umbrella with 6.6 million.

The federation said "tens of billions" of illegal files were swapped last year, with the ratio of unlicensed tracks downloaded to legal tracks sold being about 20 to 1.

As part of the effort to crack down on illegal downloads, the IFPI's Kennedy called on governments to "accept that Internet service providers [ISPs] should take a far bigger role in protecting music on the Internet."

Through "systematic disconnection of infringers and the use of filtering technologies," ISPs can fight music piracy and illegal downloads, Kennedy said. He said that a plan by French President Nicolas Sarkozy is a "groundbreaking" example of how to tackle the issue.

Sarkozy said in November he wants to suspend the Internet access of those who persist in illegally downloading films and music. The French government is planning a bill to set up an authority that can send warnings and apply sanctions such as the suspension or the termination of an Internet contract.

Kennedy yesterday said that the momentum for tougher laws is "also gathering in the UK, Sweden and Belgium."

The IFPI has about 1,400 member companies in more than 70 countries, including the labels owned by the four major record companies: Vivendi SA's Universal Music Group; Sony Corp and Bertelsmann AG's Sony BMG Music Entertainment; Terra Firma Capital Partners Ltd's EMI Group Plc; and Warner Music Group Corp.

Kennedy said yesterday it's "too early" to say when digital music sales will be able to make up for the decline in CD sales, adding that it's "very encouraging that some markets such as Japan already achieved that target."
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