I'm sure some report or another on declining record sales is published every week at the moment. The latest is the International Federation Of The Phonographic Industry's 'Recording Industry In Numbers 2007', and it says that the global recorded music market slipped by about 5% year on year between 2005 and 2006. Combined physical and digital music revenues in 2006 were $19.6 billion, down from £20.7 billion in 2005. The value of physical CDs alone slipped by 11%, to $17.5 billion.
Explaining the math, IFPI chief John Kennedy said that the overall decline was because whilst digital music sales were rising as expected, CD sales were falling more dramatically than anticipated. In his introduction to the report, 'Recording Industry In Numbers 2007', Kennedy wrote: "We hoped that the decline in physical sales would be offset by the increase in digital sales - giving us the 'Holy Grail'. But while digital sales have grown as expected physical sales have fallen by more than expected. Unfortunately this trend has continued in 2007. Physical sales continue to drop at a faster pace than we had hoped for, particularly in the US (down 7.3%) and now also in the UK (down 6.7%) - a market that had shown incredible resilience".
Needless to say, Kennedy said that a large part of the blame for the downturn in the record industry's fortunes lay with piracy. On piracy he said some achievements had been made - claiming the record industry's high profile litigation against file sharers and led to a "levelling out" of online piracy. Though, he admitted that with an estimated 20 billion music files illegally downloaded last year, compared to about 795 million music files being legally downloaded, the level of illegal file sharing remained "unsustainably high".
On the up side, revenues from mobile services, legal download platforms and performance royalties rose considerable in 2006, perhaps offering some potential for future overall sector growth.