Music Sales Drop Again

Will the decline ever end for the music business?

On April 7, the International Federation of the Phonographic Industry (IFPI) reported that sales of recorded music dropped 7.6% in 2003. Unit sales are off a cumulative 20% over the past three years, the London-based trade association reported. Worldwide sales of CD albums, which account for 86% of all recorded music, dropped 9.1%; CD singles dropped 18.7%. IFPI chairman and CEO Jay Berman described 2003 as "another difficult year" for the music industry, and blamed the slump on "the combined effects of digital and physical piracy and competition from other entertainment products."

Of the major markets, only Australia and the United Kingdom (up 1%) had upturns in sales for the year. The Australian Recording Industry Association (ARIA) earlier reported a 7.85% increase in album sales, somewhat offset by a 16.5% decline in CD singles. The IFPI figured Australia's net increase at 5.9%. China likewise improved, up 21.7%, despite what the IFPI described as "widespread piracy." China is not yet considered a "major market" by IFPI standards. Sales in Asia as a whole were off 9.8%, with Japan, the world's second-largest market for recorded music, down 9.1%.

The US had a slow first half—down 12% compared to the same period in 2002—but rebounded, with album sales increasing in the second half of the year, so that the total drop was approximately 6%. Canadian sales, however, were off only 2.9% for the year. The pickup in US music sales that began in the second half of 2003 appears to be continuing into this year. On April 1, Nielsen SoundScan reported that album sales for the first quarter ended March 31 rose 9.2% from the same period a year earlier. American music fans bought 158 million units, most of them in the CD album format, in the first quarter of this year. By comparison, they bought 144.7 million during the same period in 2003.

European music fans are losing their enthusiasm for retail shopping, apparently. Recorded music sales were off 19% in Germany for 2003, the sixth straight year for a decline in that country. The numbers were off 14.7% in Sweden, 14.4% in France, and 12.5% in Denmark. The IFPI reported that sales were down by "double digits" in Belgium, Greece, Ireland, Portugal, and Switzerland. Latin American sales were off 14.4%, and Mexico declined 16.2%, knocking it out of the world's top ten music markets.

In April 2003, the IFPI reported that global sales totaled $32.3 billion. Accounting for the decline in the value of the US dollar, the IFPI this year restated that amount as $34.6 billion. The last year of growth for the music industry was 1999, when the IFPI posted a global total of $38.2 billion.