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Take that, freetards: First music sales uptick in over a decade

Industry parties like it's almost 1999, pirates face extinction

Internet Security Threat Report 2014

Year-on-year sales of recorded music have risen for the first time since 1999, albeit by a smidgen, according to industry stats.

The business of selling and licensing sound recordings is now 40 per cent smaller than it was pre-Y2K, but in 2012 revenues increased by 0.3 per cent - and that hasn't happened before in this transitional era.

In 1999 recorded music revenue hit $38bn in the US alone as the music industry continued to benefit from the caper of persuading fans to buy their music collections all over again, this time in a format with very high margins.

Since then, the unbundling of albums into single tracks, price pressure from supermarkets, internet freeloading and (perhaps most of all) the failure to enter digital markets rapidly caused the size of the business to fall. There's more consumption than ever, but the value isn't being captured.

Growth from emerging economies - such as India and Brazil - and mature markets where services were slow to launch, such as Japan and Australia, helped a steady rise in digital sales.

For the second year running Adele's 21, released by XL - part of the tiny British independent group Beggars - was the best selling album in the world. And here we find an interesting paradox not mentioned in the music industry's statistics.

Streaming services such as Spotify are relentlessly promoted as the saviour of the recorded music, often by major labels that have a significant equity stake in them. Adele's album was kept away from the streaming services, yet millions of people had no problem buying the release at full price - in digital downloads or CD format - vindicating the label's decision to refuse to stream.

Other artists including The Black Keys, valuing their albums, have taken similar decisions. If you're an artist who has reached that once-in-a-lifetime moment when people really, really want your music, it makes no sense to settle for pennies from streams when you can bank pounds from purchases: that moment may never come again.

Download sales, rather than streaming, represent 70 per cent of digital music revenues: downloads actually increased 12 per cent overall in 2012; full digital album sales rose 17 per cent year-on-year with 207 million sold. In Scandinavia, there are four streaming music subscribers for every regular downloader while in France it's 3.6 to 1. The UK prefers to download: 19 per cent use a subscription service (either free, bundled or paid) versus 33 per cent paying to download in the last six months.

The industry pointed to a decline in unlicensed downloads - the closure of Megaupload had a significant knock-on effect on music channeled through Mad Max-style cyber-lockers - and the success of blocking pirate websites.

Peer-to-peer file-sharing, meanwhile, appears to be in steady decline since the mid-Noughties, we're told. An interesting parallel survey from market research biz NPD this week suggested that music sharing in general isn't what it used to be. Files burned and ripped by friends fell 44 per cent last year. It seems that if music is instantly accessible to you online - why go through the faff of making a rip? Unless you're crafting a mix tape, you don't really need to anymore.

The industry has continued to rely on CDs, and the closure of high-street shops has yet to be felt here. It's widely expected to inhibit the risks labels take with new signings: if you don't look attractive on the Tesco rack, you may not get signed.

You can find more figures here. ®

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