April 16, 2002 8:15 AM PDT

Music sales dip; Net seen as culprit

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Music industry blames Net for some revenue woes

February 16, 2001
Global music sales declined for the second consecutive year, a dip the recording industry blamed on the proliferation of free music swapping on the Internet.

In 2001, worldwide music sales dropped 5 percent to $33.7 billion, according to the International Federation of the Phonographic Industry (IFPI), a record industry lobbying group. That figure is down again from the 5 percent drop in 2000 to $37 billion.

For a more accurate comparison, the IFPI adjusted all 2000 sales figures to 2001 exchange rates in calculating the percent differences.

The recording industry maintained that demand for music has not waned, but that sales have been hurt by the presence of free file-swapping services, such as Kazaa, Morpheus and LimeWire, and by the proliferation of CD burners.

"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," IFPI Chief Executive Jay Berman said in a statement.

As proof, the IFPI said a survey conducted in three of its top markets--the United States, Japan and Germany--showed a direct comparison between CD burning and file swapping and a smaller appetite for music purchases. In the United States, about 70 percent of people who downloaded songs and burned them onto CDs and 35 percent of people who downloaded more than 20 songs a month bought less music. In Germany, 18 percent of 10,000 people surveyed said that burning CDs caused them to buy less music.

However, some industry analysts are skeptical that file sharing and CD burning on their own are hurting CD sales. They say the market share slide may highlight the cyclical decline from the late-1990s boom instead of the presence of new technologies.

"I think it's a very convenient scapegoat, but in reality...is more complex," said Aram Sinnreich, an analyst at research firm Jupiter Media Metrix. "The least statistically relevant factor is file sharing because there's very good empirical evidence to show that file sharing alone without a CD burner has a salutary effect on CD sales."

Still, Sinnreich agreed that combining file sharing with CD burning could dampen the desire for someone to buy CDs.

The decline in CD sales varied by region: Sales declined by 4.5 percent in the United States, 9.6 percent in Canada, 9.2 percent in Germany, 8.6 percent in Italy, 9.8 percent in Austria, 14.8 percent in Denmark and 9.4 percent in Japan.

Meanwhile, sales in France and the United Kingdom were up 10 percent and 5 percent, respectively. The IFPI attributed the increases to strong demand for local artists despite the decrease in demand for artists outside those countries' borders.

 

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