Download Sales Soar As CDs Sink

The market for music downloads and other digital forms of music has tripled in a year, helping offset a continuing decline in sales of CDs and other physical formats, an industry report said Monday.

The International Federation of the Phonographic Industry estimated that digital music sales totaled $790 million in the first half of this year, equivalent to 6 percent of industry sales, compared to $220 million in the same period a year earlier.

Recorded music sales fell 1.9 percent to a retail value of $13.2 billion in the first half of 2005, compared to $13.4 billion in the same period of 2004.

IFPI said the digital boom, which now exceeds the value of the global singles market, was largely driven by sales in the top five markets — the United States, Britain, Japan, Germany and France.

Sales of physical formats fell 6.3 percent by value in the period to $12.4 billion, the report said.

That partly reflected pressure on prices: CD sales were down 6.7 percent in value by 3.4 percent in unit volume. DVD music video sales fell 3.1 percent in value and 1.6 percent in units.

The IFPI has had some success recently in shutting file-swapping operations.

"There is a long way to go — digital and physical piracy remain a big threat to our business in many markets," said IFPI Chairman and CEO John Kennedy.

"Our industry's priorities are to further grow this emerging digital music business while stepping up our efforts to protect it from copyright theft."

The report said digital sales helped compensate for a fall in disc sales in Germany, with single track downloads growing to 8.5 million in the first half of 2005 compared to 1 million a year ago. Physical retail sales dropped 7.7 percent in units.

France had the smallest fall in physical sales among the big five markets, down 2.7 percent in value but up 7.5 percent in units.