Music sales decline 8% on piracy, industry group says

Music sales fell to the lowest level in at least 10 years as a surge in digital content failed to make up for declines in compact discs and the effects of piracy, an industry group said today. Global music sales dropped 8% to $19.4 billion in 2007, according to a report from the International Federation of the Phonographic Industry. Revenue was the lowest since at least 1997, the first year for which the body issued figures. Physical sales, of CDs and DVDs, fell 13% to $15.9 billion. Sales of downloaded songs and mobile-phone ringtones rose 34% to $2.9 billion.

Digital sales "are growing healthily but, crucially, not fast enough to arrest the overall decline of the market," said John Kennedy, chairman and chief executive of the London- based industry group.

Tackling online piracy is essential to the industry's fortunes, according to the report. "Even the most innovative business models are totally undermined by free music," Kennedy said. There were 30 billion illegal downloads in 2007, with 39% of teenagers in the U.S. using file-sharing networks to access pirated music, he said.

Physical and digital piracy cost the U.S. music industry alone $5.3 billion, the report said, citing research by the Institute of Policy Innovation. Digital piracy accounted for 70% of that figure.