The music industry has been badly hit by the growth in file-sharing over peer-to-peer networks such as Kazaa. Music lovers are able to download music for free, albeit in breach of copyright, and have been doing so in such numbers that the sales figures and profits of the traditional music formats have dropped.
Figures released by UK trade group the BPI reveal that between 1998 and 2002 (the last full year for which data is available) worldwide sales of recorded music fell by 18%.
In fact sales in the UK over the same period have risen 6%, although the singles market is going down, with unit shipments down 30.7% to 36.4m and value down 33.6% to £64.4m compared with 2002.
BPI chairman Peter Jamieson said:
"Paradoxically all I can really see in the singles market is growth. Sadly, however, most of it via illegal downloading. If we can transfer this theft to the new legitimate sites, we could soon see a return to the golden age of singles sales"
Nevertheless, the Official Charts' Company figures offer some hope, with legal downloads outselling vinyl, cassettes and DVDs for the first time. Only single CD sales were higher.
According to Jamieson:
"Digital music services without doubt represent an exciting future for the music industry. Putting the systems in place to properly reward the artists and creators of music takes time, especially against a backdrop of tough market conditions and increasing piracy. Having been in development in recent years, more legitimate services are now available to consumers and these figures show that as a format the download has officially arrived."