Online Music Sales Fail To Balance Drop In CD Sales - InformationWeek

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Online Music Sales Fail To Balance Drop In CD Sales

Consumers still go for shrink-wrapped discs, but downloads are on the rise.

Music bought online or through mobile phones reached $2 billion last year, but despite the almost twofold increase over 2005, digital sales failed to make up for the decline in CD sales, an industry trade group said Wednesday.

As of the end of last year, digital sales accounted for about 10% of the worldwide music market. To help drive sales, record companies doubled the number of songs available online to 4 million, the International Federation of the Phonographic Industry said in its Digital Music Report. The number of single tracks downloaded soared by 89% to 795 million.

Despite the success, the market failed to achieve the "holy grail" of compensating record companies for the decline in CD sales, the IFPI said. In addition, piracy remained a serious threat to the emerging digital music business and was one of the major reasons the surging digital market did not make up the shortfall in the physical market.

"As an industry we are enforcing our rights decisively in the fight against piracy and this will continue," IFPI chairman and chief executive John Kennedy said in a statement. While legal actions against major file-sharing networks have helped contain piracy, the IFPI plans to step up its campaign to force Internet service providers to help find pirates.

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