IFPI recently released its comprehensive 2007 report commenting on digital music for 2006.

McCarthy Tétrault Notes:

Record labels have become major players in the online and mobile music world, selling over US $2 billion worth of music in 2006. This amount represents a two-fold increase from 2005.

Among the highlights:

  • Digital sales now account for about 10 per cent of the music market. In 2006, the number of available songs online doubled to four million.
  • Advertising-funded services became a source of revenue for record companies.
  • Consumers seem to be enjoying the use of digital technology to change their purchasing habits. Downloading services like iTunes remains the dominant digital format for downloading, but subscription services, mobile mastertones and video licensing deals on websites like YouTube and MySpace are having a major impact on the industry.
  • Mobile music downloads accounted for almost half of all digital revenues in 2006. With the announced arrival of the iPhone and new music phone series from Nokia (like the N95) and Sony Ericsson, 2007 promises to be another interesting year for mobile music downloads. Despite these impressive numbers, digital music has not attained a level where it may compensate for the decline in compact disc sales.
  • Digital piracy continues to be a real threat to this emerging music business. IFPI states that it is stepping up its effort and asking ISPs for help in tracking down people who engage in digital piracy. In an effort to prevent the undermining of intellectual property rights, IFPI says that high-profile lawsuits in the U.S. against large-scale uploaders in 2006 have deterred illegal file-sharing. In addition, the successful closing of illegal operators such as Kazaa in Australia and Bearshare in the U.S. has had a positive impact on the online music industry.