Summary:

The six-year slowdown in digital music’s commercial growth rate ended in 2011, when digital trade revenue grew eight percent to $5.2 billion…

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The six-year slowdown in digital music’s commercial growth rate ended in 2011, when digital trade revenue grew eight percent to $5.2 billion, according to the IFPI industry umbrella group’s annual Digital Music Report.

  • That was the first year the growth rate increased since IFPI records began in 2004. Previously, growth rate of 10 percent in 2009 had sunk to five percent in 2010.
  • Globally, digital is now 32 percent of labels’ income, up from 29 percent (that is 52 percent in the U.S. and 71 percent in China). Download volume grew 17 percent to 3.6 billion.
  • Adoption of subscription services grew 65 percent to 13.4 million consumers. Remarkably, in Sweden, subscription contributes an impressive 85 percent of digital music revenue generally, thanks to its local hero Spotify.

All this gives the IFPI some cause to be bullish. “At a time when other creative industries – in particular film, newspapers and book publishing – are only now rapidly shifting to online and mobile channels, the music industry’s level of digital penetration still dwarfs that of all other comparable sectors, except games,” its report says.

The group also cites “important progress” on piracy including France’s Hadopi law and similar measures tabled in South Korea, New Zealand and the U.S.. But, as usual, it does not let the year pass by without warning: “Widespread piracy is the biggest factor undermining the growth of the digital music business.”

Nielsen research for the IFPI says 28 percent of consumers globally use unauthorised music services each month, with Spain and Brazil seeing especially high and disruptive levels.

The result of this activity is effectively a rigged music market,” the IFPI says. “Legal services, whatever their model, incur the business costs of being authorised and paying rights owners, as well as investments to develop secure payment methods and good quality services.

“This model is unsustainable when facing competition from infringing services that have greatly reduced costs and circumvent the normal rules of commercial business.”

The IFPI’s report did not break out total music industry revenue figures.

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