February 16, 2001 4:35 PM PST

Music industry blames Net for some revenue woes

The record industry poured a little more fuel on the online piracy wars Friday, blaming a steep decrease in CD singles sales in 2000 on unauthorized Internet downloads.

Shipments of singles fell by nearly 40 percent last year, after relatively flat growth in the two previous years, the Recording Industry Association of America said. Overall, CD sales were up slightly for the year, compared with 1999 sales, however.

The industry said the drop in singles sales was "principally brought on by new options provided by the Internet."

"There's no question these numbers are disappointing, but the future looks bright for the industry and consumers alike," RIAA Chief Executive Officer Hilary Rosen said in a statement. "I believe a road has been paved to enable a legitimate online music market to take hold and flourish. The appetite for music remains high and our member companies are poised to meet new demand."

The drop in singles sales, which account for less than one percent of the industry's revenues, doesn't amount to a scathing indictment of the effect of music-swapping services like Napster on the music industry, however.

Overall shipments of music to retailers lagged in the second half of the year, but the industry association attributed that in part to the slowing economy and consolidation among the large music outlets.

The recording industry has long argued that services like Napster, which allow unrestricted access to a huge library of free music, would ultimately cut into their record sales. To date, statistics have not yet backed this claim up, however. Sales of CDs have consistently grown, although not spectacularly, since the popularity of file-swapping services began exploding online.

One study did show that record sales near college campuses, where a high number of Napster users are concentrated, have fallen. But interpretations of those figures differed, as some experts said the decline could also be due in part to college students buying their music online.

Rosen has also said that actual sales figures don't matter, however. The industry's arguments against Napster and similar services rest on the copyright owners' and artists' rights to control their own work, not on the economic effects of piracy, she has said.

In the course of the year, the industry posted revenues of $14.2 billion, down nearly 2 percent from 1999. Contributing to the decline were also drops in the numbers of vinyl records and singles, cassettes albums, music videos, and an almost total disappearance of the cassette single.

Revenues from CDs rose by just over 3 percent, despite the end of minimum pricing plans that had triggered antitrust investigations from federal and state regulators.

 

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