Global music retail sales, including digital, flat in 2004

More stability in physical formats
Sharp increase in digital sales
Best year-on-year industry performance for five years

London, March 22 2005

Global sales of recorded music were flat in 2004, with a slight reduction in physical audio sales offset by growing sales of DVD music videos and a sharp increase in sales of digital music. Regionally, 2004 saw strong markets in the US and UK and a slowing rate of decline in other major markets.

Sales of physical formats declined by 1.3% in value (and by 0.4% in units) to US$33.6 billion. (The growth calculation is net of exchange rate fluctuations, comparing with US$34.1 billion in 2004). But with sales of music downloads via the internet and mobile phones making their first mark on the global market in 2004, total global sales are estimated to be flat in comparison to the previous year.

Even excluding digital sales, 2004 was the best year-on-year trend in global music sales for five years. Sales of top-selling albums reversed several years of decline. Top 10 albums sales globally rose by 14%, while the top 50 albums were up 8% in value. Eight albums sold more than five million in 2004, up from five in 2003.

Digital sales rose exponentially, with the total number of tracks downloaded in 2004 (including album tracks) up more than tenfold on 2003, to over 200 million in the four major digital music markets (US, UK, France, Germany). The trend has continued in 2005, with digital sales in the US in the first two months more than double that of the same period in 2004.

However, the picture globally is very mixed, with online and physical piracy continuing to depress sales in major markets, particularly in Continental Europe and parts of Asia.

IFPI Chairman and CEO John Kennedy said: "There are now good signs that the pattern of falling sales is behind us, but there is still a long way to go to get satisfactory rates of market growth. On the positive side, digital sales are booming, helping the overall market to its best year-on-year performance in five years, and this growth is set to continue strongly in the coming year. This is testimony to the tremendous progress of the legitimate digital music sector in the last 12 months, as well as to our decisive enforcement actions against illegal file-sharing.

“However, the global music market currently presents an extremely mixed picture. Commercial piracy and illegal file-sharing are continuing to depress our markets, particularly in Continental Europe and Asia. The priority in the coming year is to step up the advance of legitimate digital sales, sustain our anti-piracy efforts and reverse the declines that we are continuing to see in all but a small handful of major markets".

Highlights of the 2004 world sales:

Digital sales, more stability in physical sales and growing DVD music video sales helped keep the music market flat in 2004
Economic strength and strong releases helped CD volume growth of 2.8% and 4.5% in the US and UK, which together make up 47% of the value of the world market
Eight albums sold more than 5 million in 2004, up from five in 2003: they were: Confessions, Usher; Feels Like Home, Norah Jones; Encore, Eminem; How To Dismantle An Atomic Bomb, U2; Under My Skin, Avril Lavigne; Greatest Hits, Robbie Williams; Greatest Hits, Shania Twain; Destiny Fulfilled, Destiny’s Child
Strong domestically-signed artists helped the UK in particular, where four of the top five albums sold were also debuts
Slowing declines in large markets that have been hit hard by internet piracy and competition for discretionary consumer spending in recent years - notably Germany, Canada and Japan - had a significant impact. Germany (down 4.2%) and Japan (down 1.8%) saw the smallest year-on-year declines for four and three years respectively. Germany was also aided by a strong DVD market worth almost $200m, now 9% of music sales there
Music sales in Latin America grew 12.6% in value due to economic recovery, anti-piracy efforts and strong DVD music video sales – but piracy across the continent remains a huge problem at a level of more than 50% in every market
Music DVD sales rose 23% and have doubled their share of the world music market from 4% in 2002 to 8% in 2004 - with a value of US$2.6 billion dollars
CD sales increased in 36 markets in volume terms in 2004, with positive performances in some major markets but also a growing switch from cassette to CDs in developing markets in Eastern Europe, Asia and the Middle East
Certain markets in Continental Europe and Asia - notably Sweden, Finland, France, Spain and South Korea - have been drastically hit by internet piracy. The Continental European market, which accounts for over a third of the world market, fared significantly worse than other regions, falling 5.4%

Notes

All figures and trends presented in this report refer to total physical music sales (unless stated), i.e. combined audio formats (singles, LPs, cassettes, CDs, DVD Audio, SACD, MiniDisc) and music video formats (DVD, VHS, VCD). DVD figures for Asia include VCD.

Regional and world growths are based on fixed $US using 2004 IMF average annual exchange rates. These calculations exclude the following countries:

Zimbabwe – no 2003 figures submitted
Iceland, Romania, Slovakia, Slovenia – no 2004 figures submitted

Total units are calculated as the total album equivalent in each market (3 singles = 1 album). Other audio formats, including DVD Audio, SACD and MiniDisc are included in the totals and growths for each country.

‘Neg’ indicate sales under one thousand units.

For further information please contact: Adrian Strain, Julie Harari or Fiona Harley
IFPI Communications on tel: +44 (0)20 7878 7900