Music sales drop worldwide

In 1999 global music sales hit an all time high of US$26.9 billion, but new statistics from the International Federation of the Phonographic Industry (IFPI) show that figures have been tumbling every year since, and in 2009 were as low at US$17 billion.

This marks a 7.2 percent shrinkage in sales from just a year ago. There isn't really any silver lining for the music money men, as the 9.2 percent increase in digital sales was completely offset by the US$1.74 billion* shrinkage on physical sales alone.

Splitting the music sales

There were some countries whose increase in digital sales did offset the loss on physical sales, namely India, South Korea, Thailand, Mexico, Australia and the UK. The UK did show some increase, a mark up of 1.4 percent, with just over a quarter of total market share, the equivalent of US$4.2 billion.

The biggest reason for the decline are the US and Japan, the two biggest markets, who are responsible for 80 percent of the sales loss. Without them, the global fall would be 3.2 percent. Even the US digital market has seen little increase and is essentially stagnant.

Why are sales dropping?

Piracy is still the "one of the biggest obstacles" according to the IFPI.  Despite growth in digital downloads, IFPI CEO John Kennedy cites 70 percent of music consumption in the US, UK and France is digital - but accounts for only 35 percent of revenue.

Kennedy has called for governments to produce more stringent legislation on piracy, and it seems some governments may answer the call.

Sweden’s IPRED law has discouraged six out of 10 pirates, France will start issuing warnings and suspension notices to alleged freeloaders starting April and the UK is currently chewing over similar legislation. New Zealand, South Korea and Taiwan have implemented similar measure

"It would be great to report these innovations have been rewarded by market growth, more investment in artists, more jobs. Sadly that is not the case," wrote IFPI CEO John Kennedy in the report. "Digital piracy remains a huge barrier to market growth.

"Our global sales fell by around 30 percent from 2004 to 2009, the growth of our digital sales is slowing and even the success stories ... will struggle to survive unless we address the fundamental problem of piracy."

Having largely dropped stringent DRM for downloads, the industry is also now pinning hopes on uptake of unlimited-access subscription services like Spotify and Rhapsody, and on ISPs introducing bundled music packages.

With a loss in sales, artists and record companies will likely look to make more cash from tours and live performance, which bears out as the growth in live music is growing.

*These figures are wholesale trade value, not retail value.

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