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Digital Music Sales Near $3B, Don't Offset CD Sales Slump

Music sales via online and mobile channels have risen from zero to an estimated $2.9 billion - or 15% of industry sales - over the last five years, making music more digitally advanced than any entertainment sector except games, according to a new report from the international music industry.

The study by the International Federation of the Phonographic Industry (IFPI) said the spread of unlicensed music on ISP networks is choking record companies’ revenues, despite a healthy increase in digital sales in 2007, up approximately 40% on the previous year.

However, that growth did not offset the sharp fall in CD sales globally, meaning that the overall market for the year will be down from 2006, according to the study.

The IFPI Digital Music Report 2008 focuses on the challenges posed by copyright infringement. IFPI is affiliated with the Recording Industry Association of America (RIAA), which has zealously pursued legal action in the US against illegal music downloading.

Among the highlights of the report:

• The first-ever global music download sales chart is topped by Avril Lavigne, who sold 7.3 million track downloads of her song Girlfriend across the world in 2007.

• Global digital music sales are estimated at approximately $2.9 billion in 2007, a roughly 40% increase on 2006 ($2.1 billion).
• Single-track downloads, the most popular digital music format, in 2007 grew 53% to 1.7 billion (including those on digital albums).
• Digital sales now account for an estimated 15% of the global music market, up from 11% in 2006 and zero in 2003.
• In the world’s biggest digital music market, the US, online and mobile sales now account for 30% of all revenues.
• The music industry is more advanced in terms of digital revenues than any other creative or entertainment industry except games. Its digital share is more than twice that of newspapers (7%), films (3%) and books (2%).
• There are more than 500 legitimate digital music services worldwide, offering over 6 million tracks - over four times the stock of a music megastore.
• Tens of billions of illegal files were swapped in 2007. The ratio of unlicensed tracks downloaded to legal tracks sold is about 20 to 1.