In 2005, Music Went Digital

The RIAA released year-end statistics for the US recorded music market. The NY Times reports: Music Industry’s Sales Post Their Sixth Year of Decline: “In the United States, overall shipments of music products, including CD’s and digital albums and singles combined, fell 3.9 percent last year.”
According to the RIAA, physical unit sales dropped by 8% from 2004 and revenues from those sales dropped by 7.9%. In contrast, digital sales increased by 166.2% in terms of unit sales and 174.5% in revenue. The overall net effect was that total unit sales grew by 35.9% from 2004 and revenues declined by six tenths of one percent.
At The Long Tail blog, Chris Anderson discusses the effect of the digital distribution market (and uses snazzy charts): Music Industry: Is digital making up the difference?: “In revenue terms the industry did about as well last year as it did before, and it’s worth noting that the margins on digital distribution are considerably higher because there are no physical goods to manufacture and ship. So 2005 may have been more profitable than 2004 (it certainly was for Warner Music Group). Who knew?”
For the entire world, IFPI also released its 2005 year-end report: Digital formats continue to drive the global music market “Record company trade revenues from digital sales globally nearly tripled in value, from $400 million to $US 1.1 billion in 2005. The total number of digital single tracks downloaded online or to mobile phones rose to 470 million units, up from 160 million in 2004. The US, Japan, UK, Germany and France are the top five digital markets. In general, countries with a greater percentage of digital sales are the strongest markets for music sales overall.”
The Silicon Valley Media Law Blog reports that PROs ASCAP and BMI also saw significant growth in new media revenue: PROs see leap in new media revenues: “Public performance rights organizations saw marked increases in new media revenues in 2005, according to their reported financial results.”
Pitchfork interviewed attorney Steve Gordon about file sharing, copyright law, the record industry and PROs: Live at the Witch Trials: “I think the culture of the labels have been unable to adapt to the impact that new technology, particularly the web, has had on the recorded music. The labels, for many years, combined two basic characters– Ivy League-trained lawyers and savvy music business types with “ears.” Sometimes one executive was both– Clive Davis, for instance. But the one culture that was never present were techies. They are there now. But they do not call the shots. The Sony DRM debacle shows they still have no clue.”