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The decline in music industry revenues slowed to 0.8 per cent this year due to buoyant single sales and increased non-physical digital music consumption, according to media and telecoms regulator Ofcom.

Reporting research that will further fuel the debate about the effect of copyright-infringing file sharing on the music industry, Ofcom said that a jump in single sales of 27 per cent and a rise in the consumption of digital media files, rather than discs, has slowed the decline in music retail earnings almost to a halt.

"In recent years the music industry (including the recorded music industry, the collecting and licensing societies, and music venues and promoters) has experienced a number of potentially disruptive trends, partly as a result of the emergence of the internet as a major distribution channel," Ofcom's annual report into UK media use said.

"Despite these pressures, the decline in retail recorded music revenues slowed almost to a halt in 2009, according to data from the Entertainment Retailers’ Association," the report said. "Total revenues declined by just 0.8 per cent in 2009, compared to a compound annual decline of 6.9 per cent over the past three years."

The report suggested that at other times the performance of the music retail market might have been even better.

"It is worth noting that this relative improvement in performance took place during a recession, when disposable incomes may well be squeezed. Total revenues stood at £1.31bn in 2009, compared to £1.32bn in 2008 and £1.63bn in 2006," it said.

Ofcom found that the purchase of singles as downloads had spiked in 2009, while album sales had fallen. It suggested that the two figures might be related, with consumers buying only the tracks they liked, rather than full albums.

"Almost all singles tracks (98 per cent) are now purchased via digital means. And overall singles volumes have grown rapidly," it said. "It is likely that a large part of this is due to the increased availability of tracks to download as singles on music download services, and the removal of the need to buy tracks ‘bundled’ as albums."

Ofcom also reported on individuals' other media use, finding that people in the UK now spend half of their day using media or communications services. That use is increasingly concurrent, it found, with nearly nine hours of activity squeezed into seven hours of actual use.

"Older consumers spend most of their media and communications time using TV and radio sets, while younger people spend half of their time with computers, mobile phones and handheld devices," the Ofcom study said. "Using a mobile phone or a computer is most likely to be undertaken at the same time as other media (57 per cent of mobile phone use takes place concurrently with other media activity and 62 per cent for computer use)."

It found that fixed line broadband available was stable at 65 per cent of households, while overall broadband penetration increased by three per cent because of an increase in takeup of mobile broadband services.

Telecoms and media industry earnings fell by two per cent from 2008 to 2009, the study found. Consumer spending on telecoms also fell by around two per cent, it said.

See: The report (379-page / 1.9MB PDF)

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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