IFPI publishes Digital Music Report 2007

Record labels have become digitally literate companies, selling an estimated US$2 billion worth of music online or through mobile phones in 2006 (trade revenues), almost doubling the market in the last year. Digital sales now account for around 10% of the music market as record companies experiment and innovate with an array of business models and digital music products, involving hundreds of licensing partners. Among new developments in 2006, the number of songs available online doubled to four million, thousands of albums were released across many digital formats and platforms, classical music saw a "digital dividend" and advertising-funded services became a revenue stream for record companies. If you're interested in the development of the digital music industry, IFPI's Digital Music Report 2007 is available online and well worth a read.

However, despite this success, digital music has not yet achieved the "holy grail" of compensating for the decline in CD sales. Meanwhile, digital piracy and the devaluation of music content are a real threat to the emerging digital music business.

Research suggests legal actions against large-scale P2P uploaders - some 10,000 of which were announced in 18 countries in 2006 - have helped contain piracy, reducing the proportion of internet users frequently file-sharing in key European markets. Yet actions against individual uploaders are only the second best way of dealing with the problem. IFPI is stepping up its campaign for action from ISPs and will take whatever legal steps are necessary.

The conclusions are published today in IFPI's Digital Music Report 2007, a comprehensive round-up of developments in the sector.

IFPI's report shows how the record industry is combining digital technology with its traditional skills of discovering and marketing music. It also sets out where the music sector needs action by government and its industry partners to tackle piracy and prevent the undermining of its intellectual property rights.

Consumers are finding that digital technology is helping to change their purchasing habits. They are taking advantage of the unlimited 'shelf space' in online stores, buying recordings that would have long vanished from the shelves of even the largest offline stores.

Recent months have also seen digital music distribution channels diversify. A-la-carte download services, led by iTunes, remain the dominant digital format, but they compete in a mixed economy with subscription services, mobile mastertones and more recently new advertising-supported models and video licensing deals on sites like YouTube and MySpace.

Mobile music accounted for about half of global digital revenues in 2006, but the split between mobile and online varies sharply by country. In Japan around 90% of digital music sales are accounted for by mobile purchases. 2007 could prove to be a landmark year in the mobile music market, as handset makers such as Nokia and Sony Ericsson develop their music phone series. Meanwhile, Apple has announced the launch of the much anticipated iPhone.

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