German Music Biz Hit by Pirates For Seventh Straight Year
March 22, 2006
The German music industry is still suffering from the weight of piracy with little hope of any growth in sales in the near future, according to the managing director of the German branch of the International Federation of the Phonographic Industry (IFPI) and the German Phonographic Industry Association (BPW).
Peter Zombik, the executive director of IFPI's Germany chapter, delivered a gloomy annual review of the industry at the annual press conference of the German recorded music associations in Berlin. Not for the first time illegal downloaders and CD pirates were the main culprits.
The industry in 2005 was again plagued by illegal private copying and downloading which hit CD sales and precipitated a seventh consecutive annual decrease in turnover, Zombik said. As illegal copying increased, CD sales fell steadily throughout the year, he added.
As a result the hoped-for recovery in the industry did not materialize.
"Despite high expectations, 2005 turned out not to be the year in which the turnaround for the music industry took place," Zombik said.
CD sales contine to fall as illegal copying increases
Total turnover for the German recording industry fell in 2005 for the seventh year in a row to 1,746 million euros ($2,113 million), down from 1,753 million euros in 2004. This represents a decrease in sales of almost 45 percent in comparison with 1998.
This can be directly linked to statistics which show the increase in illegal copying over the last seven years. The amount of music copied illegally has risen sharply from only 58 million CD equivalents in 1999, with a corresponding steady decline in CD sales, which have fallen every year since 1999 when 198 million CDs were sold.
Zombik told the press conference that in 2005 the equivalent of 439 million music CDs were copied illegally in Germany, in comparison to sales of 123.7 million CDs, leading to the industry having to make "massive re-adjustments" including job losses. Over 30 percent of jobs in the sector have been lost in the last seven or eight years.
According to industry figures, 21 million people copy music illegally in Germany, from a total population of 82 million.
Unsurprisingly, industry executives called for more to be done to protect music and to combat illegal copying and measures suggested included restricting private copying to only making backups of CDs that the consumer owns, a ban on software which can copy individual titles broadcast on internet radio stations, and better legal instruments to combat piracy, such as the right to obtain information on illegal downloads from internet service providers (ISPs).
Legal downloads hit CD singles sales
Even the positives had a downside. Music tracks sold legally over registered portals increased in 2005 to 16.4 million individual tracks from 6.4 million tracks in 2004. But, as a result, the sales of CD singles were drastically reduced. Sales fell from 21.1 million units in 2004 to 15.4 million units in 2005.
While one could argue that while CD singles sales shrank, the titles themselves were still selling albeit in a different format, Zombik pointed out that the online market is still very small in comparison to traditional channels, only making up around 2 percent of sales.
Even though the industry was still suffering from a slump in sales, there was some reason to be cheerful in the news that German artists had seen an increase in popularity last year. CDs from German artists now comprise 35.3 percent of total album sales, an increase from 30.3 percent in 2004. In terms of singles, German artists are now more popular than international stars and make up 51.4 per cent of singles sales.