By Andy McCue, 14 June 2005 13:00
NEWS Declining CD sales cannot be blamed on the rise of internet file-sharing networks, according to a new report into the state of the global online digital music industry.
The Organisation for Economic Co-operation and Development (OECD) report found a "pronounced" fall in overall global CD sales of 20 per cent between 1999 and 2003, while the number of simultaneous users on all peer-to-peer networks reached almost 10 million in October 2004.
Digital music piracy is acknowledged as a problem by the OECD but the report cites other factors - such as the rise in the number of entertainment sources - as being more likely to have had a significant impact on music sales.
"It is very difficult to establish a basis to prove a causal relationship between the size of the drop in music sales and the rise of file sharing. Sales of CDs, as well as the success of licensed online music services are likely to have been affected to some degree by a variety of other factors, for example physical piracy and CD burning, competition from other, newer entertainment products and faltering consumer spending in some markets," the report said.
And while there was a large fall in CD sales in the US, other countries, including France, Germany, Japan and the UK, actually experienced steady or growing CD sales.
The OECD questions the viability of some music download business models and warns that the music industry needs to find a balance between reducing online piracy and developing models that are attractive to consumers, as well as providing existing and new participants in the online music arena with a growing stream of revenue for the creation and legitimate distribution of original recordings.
The report said: "Online music providers still seem to struggle making profits at current prices, with demand growing from low levels and having to compete against unauthorised downloading. In the current, low-volume market, digital economies of scale have not yet been realised. Some of the fixed costs of labels to produce artists stay essentially the same as before. Moreover, the digital distribution of songs is far from costless."
The report was compiled by Dr Sacha Wunsch-Vincent and Dr Graham Vickery of the OECD's Directorate for Science, Technology and Industry.
Comments
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1. stephen dobson
The reason that CD sales are falling is because record companies are putting out to many CD's by artists that are only mediocre, it seems the record companies believe their own hype.
It’s a triumph of quantity over quality.
2. anonymous
As well as a distinct lack of quality I believe that CD's are quite simply too expensive.
There's a huge sharing/burning network among friends in the 18-35 age bracket because there's no logic to them each paying £13-£17 for the latest album.
Blank CDR's cost less than 20p each!
3. James Button
Before the 'piracy loss values' put out by the record and media ditsribution companies can possibly be considered as remotely realistic they need to differentiate between
Pirate copies that were only purchased because they were affordable rather than having a £8 -£15, or more markup. So the high price version would never have been purchased - borrowed from a friend yes - bought Ha! no way
Pirate downloads that are followed by a purchase of the real ' expensive' media that comes complete with purchase incentives such as good documents, and poster offers for fans.
Downloads by people who the distributors would not consider supplying at any reasonable price with physical media because of their location.
How many record stores are there in Central Africa, rural India, etc.
Then again, how many people now have portable/laptop means of viewing video's so don't listen to as many CD's
How many cars have good radios, and good transmission coverage from 'hot' stations in their travelling areas -
I know that when I'm driving I listen to the radio much more now than I used to 20 years ago when VHF reception was spotty, and the lower frequencies were 'not good fidelity' over most of the country.
I used to listen to recorded music a lot 20 years ago, now it's the good radio stations.
Perhaps, should we have the BBC banned?