Finally, music sales hit a rising note

After a 13-year decline, global industry revenue climbed a touch in 2012. Analysts say legal digital services have put a big dent in years of piracy.

By Bruce Kennedy Feb 28, 2013 9:38AM

Image: Teens with MP3 player ( RubberBall/SuperStock)It has taken 13 years, but sales of recorded music were up fractionally last year -- and industry officials say this is the start of a new era for a music sector that for a very long time looked like it was going under, thanks to digital piracy.


Wednesday's report by the London-based International Federation for the Phonographic Industry says worldwide music sales rose 0.3% in 2012 -- marking the first time since 1999 that they haven't dropped.


That promising upward blip, according to the Federation's Digital Music Report 2013, indicates "the global recorded music industry is on a path to recovery, fueled by licensed digital music services and rapid expansion into new markets internationally."


Those better music revenues were reportedly boosted by downloads, subscription services and other channels.


"It is hard to remember a year for the recording industry that has begun with such a palpable buzz in the air," Frances Moore, the federation’s chief executive said in Wednesday's press statement. "These are hard-won successes.... They show how the music industry has adapted to the internet world, learned how to meet the needs of consumers and monetized the digital marketplace."


Other data appear to support the industry's optimism. Nielsen says 2012 overall music sales in the U.S. were up 3.1% compared to 2011 -- a figure that was fueled by digital music sales.


Industry analysts say the game-changer behind these statistics is the growing use of legal music streaming services.


NDP Group, an international information firm, says illegal music file-sharing dropped by 17% last year, compared to 2011, while the volume of music files pirated via so-called peer-to-peer (P2P) services also declined, by 26%. Some other surprising data: Music files burned and ripped from CDs owned by friends and family was reportedly down 44%, while the files swapped across hard drives fell 25%. 


"For the music industry, which has been battling digital piracy for over a decade, last year was a year of progress," Russ Crupnick, a senior vice president at NPD, said in a press statement. "Among other factors, the increased use of legal and licensed streaming services has proven to be an alternative for music fans who formerly used P2P networks to obtain music."


The industry is also finding new ways to harvest digital music revenue.


"Sales of downloaded singles and albums, from services like Apple's iTunes, continue to grow," reports The New York Times. "More promising for the industry, however, are subscription-based offerings, including Spotify, Rhapsody and Muve Music."


Subscription services from Apple (AAPL) and Google (GOOG) are also expected to bring in new fees and licensing revenue for music companies -- along with new ways to market music.


"At the beginning of the digital revolution it was common to say that digital was killing music," Edgar Berger, chief executive of Sony Music Entertainment's (SNE) international division told the Times. But now, he notes, you could say "digital is saving music."


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