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It's Just Business

Revenues In 2012 For Record Labels Increase While Music Piracy Decreases

Posted by on February 27, 2013 at 3:32 pm

For the first time since 1999, an increase in revenue was seen from the sales of recorded music (as picture above). Could things be on a slow crawl upward for the industry at long last?

An article published on February 26th by The Hollywood Reporter pointed out that the music industry has come out on top in 2012 in terms of revenue. Author of the article Eriq Gardener says-

The International Federation of the Phonographic Industry reports that global revenue rose 0.3 percent last year to $16.5 billion. Although the revenue bump was modest, the IFPI says that it was the first sign of industry growth since 1999.

Digital income is fueling the economic improvement. Revenue from downloads, subscription and advertising-supported ventures grew 9 percent to $5.6 billion in 2012. The IFPI also reports that the number of people paying to use subscription services leapt 44 percent to 20 million worldwide.

To know that people are buying music again is extremely exciting, however small the profit. If this doesn't phase you as much as it is myself, think about it like this-

You're a huge fan of Band X. They've got hundreds of thousand of fans on Facebook (who are not spam bots) and all their albums absolutely slay. When they release a record, however, you notice that they only sold 2,500 copies. So 2.5% of their fans bought the album? Your friends way over in Town Y all downloaded the album but "are going to buy their t-shirts and merch at the live show, so no big deal." Except Band X doesn't get to get on any sick tours or do any extensive gigging around the country because their label is noticing that they didn't sell any records. So now your buddies are missing out on the live show and they don't get to buy any merch; neither do you now.

See the issue here? I'm sure you've heard a thousand arguments for and against piracy, but that's the bottom line right there. No record sales equals no touring and no money for the label, which means that in the end everybody loses and your favorite band potentially gets dropped. The even better part about all these findings is that not only are the sales of recorded music going up, but the rate of piracy is going down. According to The NPD Group

Last year the number of consumers using peer-to-peer (P2P) services to download music declined 17 percent in 2012 compared to the previous year. When P2P file sharing peaked in 2005, one in five Internet users aged 13 and older (33 million people) used P2P services to download music; however, last year that number fell to 11 percent (21 million people).

The volume of illegally downloaded music files from P2P services also declined 26 percent, compared to the previous year; however P2P wasn’t the only sharing activity to shrink. Music files burned and ripped from CDs owned by friends and family fell 44 percent, the number of files swapped from hard drives dropped 25 percent, and the volume of music downloads from digital lockers decreased 28 percent.

Everything isn't all sunshine and happiness in the industry, but it's a step in the right direction.