Digital Music Sales Triple in 2005

The market for digital music downloads via the Internet and mobile phones nearly tripled in 2005, accounting for 6 percent of total record industry sales, a sign anti-piracy efforts are working and digital music is catching on.

The value of digital music downloads rose to $1.1 billion last year, up from $380 million in 2004, as music fans downloaded 420 million single digital tracks from the Internet, according to the International Federation of the Phonographic Industry (IFPI), in a report this week.

"Music is today making an enormous contribution to the development of the worlda??s digital economy," IFPI Chairman John Kennedy wrote in a letter inside the report.

Digital music sales will see "further significant growth" this year, driven by the proliferation of portable music devices, multimedia mobile phones, and the increased use of broadband Internet, IFPI said.

Sales Slowing?

However, sales of digital music slowed considerably in the second half of last year to just $310 million, less than half the $790 million tallied during the first six months of 2005, according to information provided by IFPI. The London-based industry group, which promotes the interests of over 1400 companies tied to the international recording industry, gave no reason for the decline in the second half of the year.

Still, music fans downloaded 420 million single tracks last year, 20 times the number legally downloaded two years ago, while record companies doubled the number of licensed songs available to over 2 million, according to IFPI.

In addition, the group expects mobile phones to become a prime digital song mover this year, noting mobile music already accounts for 40 percent of digital revenues for record companies. Ringtones account for the bulk of the over $400 million collected for mobile digital music last year.

Among the milestones IFPI listed for 2005, there are now 335 legal music download sites around the world, up from 50 two years ago, including the first new legal music services ever for China and Argentina.

Apple Computer drew rave reviews from the IFPI for its iTunes music store, which has spread to 21 countries, and for adding video to its music device line-up. The maker of the world's most popular digital music players sold around 32 million iPods last year, according to information on its quarterly earnings releases.

Legal music downloads are also rising in popularity, according to the IFPI, due in part to new legal music download services and also to global litigation. The group noted that actions against illegal file-sharing grew to nearly 20,000 cases in 17 countries last year, and that a series of judgments against unauthorized swapping services in the U.S., Australia, Taiwan, and South Korea is helping transform the digital music market and shift consumer attitudes.

Consumer research in the IFPI report indicates that every second person who cut back on illegal file-sharing did so out of fear for the legal consequences.

"The digital music business is at a pivotal moment at the start of 2006. Consumers are increasingly turning to legitimate ways of downloading music, the legal environment for our business is improving and record companies are licensing music prolifically and diversely," said Kennedy.