Music from the Net makes it's Billion Dollar Mark

$ 1.1 Billion was the figure that says it all! Worldwide Digital Music sales tripled in 2005, according to The International Federation of the Phonographic Industry (IFPI). Moreover, the Federation predicted that at this rate, Digital Music Downloads would account for about 25% of global music revenues.

The IFPI, which represents 1,450 record companies around the world, reported that consumers downloaded 420 million music tracks legally from services such as Apple's iTunes, Napster, MSN etc. This figure is more than double the 156 million legal downloads made in 2004, which made music downloads in 2005 account for about 6% of global music industry revenues. Album downloads rose to 16 million and accounted for nearly 3 percent of the total U.S. album market, which is just amazing.

"2005 was the year that the digital music market took shape," said IFPI chair John Kennedy. He also added that music fans in Britain and Germany, two of the biggest digital music markets in Europe, are relying on legal downloads from pay-sites instead of going for illegal file-swapping through P2P networks. In the UK itself, digital music sales were up 357 per cent, from 5.8 million tracks in 2004 to 26.4 million in 2005. This trend is expected to spread as new and pioneering legal music distribution channels open up to consumers.

"This is great news for the digital music market and the wider digital economy. Record companies are licensing their music prolifically and diversely. A new wave of digital commerce, from mobile to broadband, is rolling out across the world. It is generating billions of dollars in revenues and it is being driven, to a large extent, by music - by the people who create music, who produce it and who invest in it," Kennedy said.

IFPI also said that Apple iTunes service leads the pack among 335 such legal music download services, operating in 21 countries and selling more than 850 million downloads since launching in 2003. Music for mobile phones now accounts for 40% of digital music revenues, the report said. Record companies doubled the number of tracks available to 2 million as subscription services boasted 2.8 million subscribers in 2005 compared with 1.5 million the year before. Also, the IFPI estimates that 165,000 albums are now available online.

However, illegal music download still has it's share of bandwidth as close to 5% of the total music downloaded over the internet was through various P2P networks and was completely illegitimate. Therefore, illegal file sharing remains a big problem confronted by the music industry. The IFPI remarked in this context that it has now filled close to 20,000 lawsuits against individuals swapping songs for breach of copyright.

The IFPI also called on Internet Service Providers, or ISPs, to join the fight against music piracy. Kennedy, who said he approached prominent ISPs a year ago about a coordinated response and has received "effectively a zero response," put them on notice that the IFPI would consider litigation if they did not join the fight against piracy.

"The challenges we now face are far too big for complacency. In particular, we need more cooperation from service providers and music distributors to help protect intellectual property and contain piracy," Kennedy said. "It is not enough that they share in the success of the digital music business, they need to take on their share of the responsibilities as well.

Kennedy added that he will be speaking to Internet Service Providers at next week's MIDEM international music mart in Cannes about the need for Internet service providers to share in the fight against piracy. "There will be further significant growth in 2006 as the digital music market continues to take shape," he said.