* Legal digital music sales grew 12 percent in 2009
* Overall sales down around 10 percent
* Spain hit hard by piracy, Japan also affected
By Kate Holton and Matt Cowan
LONDON, Jan 21 Global recorded music sales fell
around 10 percent in 2009 and are down 30 percent since 2004 as
rampant illegal downloading eats into legitimate digital and
physical sales, the industry's trade body said on Thursday.
The IFPI said in its annual report the industry had seen
positive developments in 2009, with more than a quarter of all
recorded music revenues now coming from digital sales after the
industry embraced new ways to sell tracks.
However, the rate of growth has slowed in recent years, and
sales from the likes of Apple's (AAPL.O) iTunes and Spotify
failed to counter the damage wrought by illegal downloading.
"We've had yet another year of new services coming to the
market, great innovation, growth in our digital business," IFPI
Chairman and Chief Executive John Kennedy told Reuters in an
interview. "But at the same time the problems that we're facing
with piracy have certainly not gone away.
"We have always hoped the day will come that the increase in
our digital business will make up for the fall in our physical
business and that's certainly not happening yet."
The report showed legal digital sales grew by an estimated
12 percent in the year to $4.2 billion, compared to the 25
percent growth recorded in 2008 and 30 percent growth in 2007.
Overall recorded music sales were estimated to be down
around 10 percent compared with a fall of around 7 percent in
2008 and an 8 percent fall in 2007.
The IFPI estimates that around 95 percent of the music
downloaded in 2009 was illegal and not paid for.
The IFPI said the worst-affected markets were countries
where legitimate digital services had yet to take off. Sales
fell around 17 percent in 2009 in Spain for instance, and the
market is now about a third of its 2001 level.
"In Spain, a culture of state-tolerated apathy towards
illegal file-sharing has contributed to a dramatic slump
in the music market," the report said.
The IFPI said this approach had resulted in a drop off in
investment in local language artists, who then struggled to
feature in the album charts.
Japan, traditionally a strong market for digital sales,
reported flat digital revenues in the first half of 2009, with
CD sales falling more than 20 percent, due to mobile piracy and
the economic downturn.
The report said the global legitimate digital market had
been boosted by an array of new offerings, including
subscription services on mobile phones and via Internet service
providers, download offerings and advertising-funded models such
as music-streaming service Spotify.
In total, more than 400 licensed music services are now
available around the world, offering 11 million tracks.
Sales of music downloads, the dominant revenue stream within
digital music, continued to see steady growth, with single track
downloads up by around 10 percent on 2008 and digital albums up
by around 20 percent.
Free, advertising-funded services have also shown signs of
attracting users who had previously used illegal sites and music
executives noted these services could grow very quickly.
Rob Wells, the senior vice president of digital at Universal
Music Group International, told Reuters Spotify had become its
fourth biggest international digital partner by revenue in one
He said a service from Nokia NOK1V.HE, which supplies
music with the price included in the charge for the handset or
phone subscription, had also done well in developing markets and
underperformed in more developed markets. The service was
launched with much hype in 2008 but had not appeared to sell
(Reporting by Kate Holton; editing by Will Waterman and Karen