Not all Bad News is Bad News

The latest Interim Sales figures from the IFPI show that global recorded music sales fell by just under 11 percent (in both unit and value terms). Three of the major markets (USA, Japan and Germany) recorded double digit declines and the last bastion of major market growth, France, also finally posted declining sales.

So is all doom and gloom? And., of course, is it all down to illegal file sharing? Well I would say “no” and “no”.

The UK recorded a value decline of over 6% but only 1% in volume terms which illustrates the UK’s continued price evolution: CDs are getting closer to the price point that will drive people to buy rather than burn or download. Retailers and labels will lament the fierce price competition and increasing reliance on discounting and ever more frequent sales, but these measures are clearly close to turning around the UK sales slump.

The IFPI does list illegal file sharing as a principal cause, followed by CD burning and commercial piracy, but I suspect this is diplomatic inclusion for the labels, for later on in the report the IFPI restate their traditional party line and aim an implicit shot of criticism across the bows of the RIAA:

“Outside the US the development of legitimate services and copyright education activities are the main focus…”

The IFPI’s continued policy of explicit support of Europe’s fledgling legitimate online sector is welcomed.

Home copying and commercial piracy are the largest culprits of declining music sales, a further piece of evidence for which is seen by Mexico experiencing the largest major market decline (32.4%) even though Internet penetration levels there are modest at best.

The other major ingredient in the mix of course is the structural readjustment of the recorded music market. The IFPI expects stronger Q3 and Q4 sales due to strong new releases from major acts. This really gets to the heart of the matter: whereas in the 90’s CD sales were kept buoyant throughout the year by people stocking up with back catalogue as they replaced their tape and vinyl collections. The music industry now has to depend far more heavily on the strength of strong new releases, which surely can’t be a bad thing?

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