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Music piracy stunting digital music revenue: industry exec

Legitimate music downloads still aren't growing quickly enough.
/ Source: The Associated Press

Legitimate music downloads still aren't growing quickly enough.

A report published Monday by the recording industry's main lobby group showed that digital revenue has grown 8 percent over the past year to about $5.2 billion — a solid figure for some industries, but not one where overall receipts have fallen by nearly two-thirds amid a shift toward online — and in many cases illegal — music downloads.

"The 8 percent figure should be much higher," said Frances Moore, the chief executive of the International Federation of the Phonographic Industry. "That's part of our task in 2012."

Moore blamed music piracy for starving online retailers and music subscription services of customers, saying the legitimate music business was working in an "extremely challenging" environment.

"It's very difficult to turn things around overnight," she said.

The IFPI's report highlighted many of those turnaround efforts, noting for example that there are around 500 legitimate music services worldwide offering up to 20 million tracks.

It said subscription services were doing particularly well in Scandinavia, the home of popular music service Spotify, whereas in France the number of subscribers nearly doubled in the first 11 months of 2011.

Music pirates remain the IFPI's No. 1 enemy, and the group's report congratulated several countries on their efforts to crack down on illegal file sharing.

It said French authorities had sent out more than 700,000 warnings to suspected copyright violators, an act it said had helped drive down file sharing on peer-to-peer networks by 26 percent since October 2010.

In the United States, the group said most major American Internet service providers had signed up to a "copyright alert system" aimed at issuing similar warnings to suspected file sharers.

Even in China, where piracy rates approached 100 percent, the IFPI said progress was being made. In June record companies joined hands with search engine Baidu to fight pirated content and create authorized digital music service Ting.

But the fight against infringement has seen some high-profile reverses, including last week's shelving of the Stop Online Piracy Act in the U.S., which was originally intended to block access to pirate websites. Critics accused the law's backers of installing a regime of Internet censorship, and Google and Wikipedia partially obscured or entirely blacked out their websites in a dramatic and ultimately successful protest.

Moore described the bill's demise as a setback and said that the technology community "has come out a bit hysterically against this."

But she said her organization would continue to lobby internationally for website-blocking, arguing that the measure was "efficient, effective, and proportionate."

There's much at stake as the music industry struggles to build its online presence. Worldwide sales of physical music — such as CDs — have dropped from $28.1 billion in 2000 to $10 billion in 2011.

Independent media analyst Mark Mulligan said in the U.S. the music industry has "already lost half of the music market in the past 10 years."

He said there was no realistic hope digital music would make up for the shortfall in the near term.

"What we're talking about is: 'How much of a burning building can we save from the flames?'" he said.