From www.ifpi.org

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Editors Note: This is from the IFPI.ORG website. The IFPI is the World version of the RIAA (in fact the RIAA is a member)It is full of the usual unsubstantiated "facts." Jay Berman is the former head of the RIAA and recommended Hilary Rosen to head the RIAA afer he left.

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London, April 9, 2003

World sales of recorded music fell by 7% in value and by 8% in units in 2002. Mass downloading from unauthorised file sharing on the internet and the massive proliferation of CD burning continues to be a major cause of the fall in CD sales globally, combined with competition from other entertainment sectors and economic uncertainty on consumer spending.

Recorded music sales worldwide fell to US$32 billion in 2002. Compared to 2001, sales of CD albums fell globally by 6%, and there were continued declines in sales of singles (-16%) and cassettes (-36%). Music videos however saw a growth in value of 9%, driven by strong growth in DVD.

The figures were published today by IFPI, the organisation representing the record industry worldwide. IFPI comprises a membership of 1500 record companies, including independents and majors, in 76 countries.

Jay Berman, Chairman and CEO of IFPI said: "This year's figures hold no surprises. Widespread use of illegal sites, made easier with the growth of broadband access in the major markets, is affecting an industry that is also having to compete with increased sales of other entertainment formats such as DVD films and new video game consoles."

"At the same time there are exciting new opportunities opening up to music. The recording industry is pressing ahead with legitimate online music services, and the past few months have seen several new sites, such as dotmusic.com, popfile.de, hmv.co.uk and imusica.com.br, go live. Meanwhile the release schedule for the past year was very strong and although major albums are selling in smaller quantities, we have seen some very strong albums from the likes of Eminem, Shakira, Norah Jones, Avril Lavigne, Nickelback and Red Hot Chili Peppers."

The industry has also stepped up its fight against music piracy worldwide, with intensified legal actions against infringing peer-to-peer services and a global education campaign aimed at online piracy among corporations, government and colleges and universities.

Other positive trends for the industry include the growth in sales of music videos, which saw a 12% rise in units sold. Growth worldwide is attributed to the increase in sales of DVDs overall and DVD players; DVD music videos rose by 58% compared to a 42% decline in VHS. With the release of over 1,300 new titles by record companies in 2002, DVD music videos are expected to become a growing contributor to music sales.

New formats such as DVD Audio and Super Audio CD (SACD) also did well. Music companies have launched new CD titles simultaneously on DVD Audio or SACD. Since 2001, unit sales of both DVD Audio and SACD combined more than trebled, with each format selling over one million each in 2002.

Sales by region

The US saw a third consecutive year of decline, with album sales down 10% in units, mainly due to falling sales from major album releases affected by sales substitution from internet sources.

Japan has continued to suffer from internet piracy and CD burning. An estimated 236 million CD-Rs were burned in 2002, while legitimate CD sales were 229 million. Overall the Japanese market fell 9%, but has the biggest national market share for music video sales, valued at $US 407.5 million.

Several Western European markets performed relatively well in the context of the global decline. France, the world's fourth largest market, continued to defy the global trend with 4% growth in unit sales. This is largely attributable to the continued growth in sales of French repertoire. Norway, Italy and Portugal also saw more or less flat markets.

The German market stands out as worst affected by mass CD burning. Sales fell by 9%, Germany's fifth consecutive year of decline. Spain has now fallen behind other Western European countries in per capita sales, with a fall of 16% in value. Spain has seen a sharp increase in physical CD-R piracy: in 2002 some 24 million pirate units were sold, in other words two out of every five records.

The UK market in 2002 came to the end of its five-year growth run. While the number of albums sold remained stable at 226 million, downward pressure on prices meant the value of album sales fell by 3% and illegal downloading was just one of the factors contributing to the continued decline in single sales. However 2002 was a strong in the UK for domestic artists, who accounted for half of the top 40 selling albums.

Music sales across Asia fell by 10%, largely because of continuing economic difficulties and both physical and internet piracy. The exception was Singapore, which experienced a growth in both regional and international repertoire.

In Latin America, Brazil partly recovered from last year's severe decline (up 4%) due mostly to stock liquidations. Mexico remains the biggest Latin American market and 10th in the world despite a second consecutive year of decline, with sales down 19%. Piracy continues to plague the market with 50% of the population buying pirate music products. The Argentinean market continues to suffer from severe economic and political instability and has fallen steeply by 23%.

I can't remember the last time I actually saw a pre-recorded cassette or CD single available. Yet they continue to use these figures to make the numbers appear worse than they actually are. For example, the total 7% decline in sales is 14.3% due to the decline in cassette and singles sales. That's 1 of those 7%. Of course they actually shipped less, but they aren't telling you that. You don't ship it, you can't sell it. They say cd sales are down 6% yet DVD and super audio CDs are actually up 12%. Given the state of the economy, the much better entertainment value for DVD and games, it's not hard to imagine that sales are down. If "rampant piracy" is killing the industry why are they only down 7%?. It should be 50% or more.

/me wonders what they would blame if there was no such thing as "online piracy"

Napster...that's always their fall back position...

Notice, no where do they mention that they released less stuff, like thumbtack said. Also what about the economy thats in a slump so every market is hurting and is every other market crying "online piracy"? NO. If the economy is bad and you, as a company, release less product(some of that product unusable due to protection measures), get caught price fixing, not to metion alienating all of your consumers by calling them all criminals, of course your sales will be down. Hell, I am suprised it has not gone down even more.

I still find it funny that their decline didn't begin in ernest until Napster was closed.

I'm surprised a story with this many holes was even published... Where's the story from boycott-riaa.com (or elsewhere) setting the record straight in a newspaper/magazine/classified ads paper?

I have to agree with everyone here. It's not "piracy" affecting the sale of CDs, it's the economy. Me, I've been without a job since July. In that time, I've only been able to buy three CDs and two of those were when I'd gotten money from some source, the third was bought using rocketcash.

Back when I was working, I was able to buy more CDs, I believe about 8 or 9 for the whole year. But, since the RIAA can't see the light of day, they'd undoubtedly say I was a "pirate". I'm sorry, but I can't buy a CD when I have no money.

The other reason I didn't buy as much music from July 2002 to the present is because there hasn't been as much released that I like. I listen mostly to rock and much of the music released since July has been rap music. I'm sorry, but I'm not 12 years old anymore (haven't been in 12 years) and I don't listen to that. And now, they finally release something rock (Godsmack) and I have no money to buy it.

Ironically, I'm about to apply for employment at a record store. And since the RIAA says downloading affects record store employees then I would hurt my own job by downloading one song. Guess they'd never see the paradox.

Many titles today are directed towards kids and teens, what about us adults?

We wont buy their teenie bopping or rapping records, so were the pirates?

"An estimated 236 million CD-Rs were burned in 2002, while legitimate CD sales were 229 million."

I wonder how many of those were used for legitimate purposes? 50-60% maybe? Backups are wise these days.

As thumbtack said, I never ever see any new cassettes or even singles anymore. They are phasing them out, yet they just put them there to make things look like they are being pirated to death.

I wish the govt would just wake up. :/

They need to realize that their CDs cost too much.

A CD and a DVD movie cost roughly the same right? The difference is that a DVD is a solid 1.5-2 hours of entertainment, often times with extras such as outtakes and director/cast interviews....whereas the typical CD nowdays is an hour with 10 songs..the majority being fillers.

I don't support piracy...but from the looks of this it's their own fault. DVDs and gaming consoles actually have entertainment vaule that is worth their costs....CDs are grossly overpriced in thier current state.

You want people to pay $17 for a CD? Give them 17 QUALITY songs (not 1 or 2 hits with fillers).

And for shit's sake....if they want people to pay that much for a CD....why be surprised when CD-R's get used to make backups so they don't have to pay for it again.

The story at the top of this page is 95% total fabrication.

If Jay Berman is telling the world that piracy is the cause of the drop in sales, he is either a moron or a liar.

The record industry drastically reduced the number of releases BEFORE THE NAPSTER HEARINGS. The next year, they cut the number of releases even further.

Item 2 -- I can hook up with discmakers.com and have CDs burned for $1.89 each or less. The price starts dropping if I order more than 1,000.

According to EMI's financial statements, their Cost of Goods Sold in 2001 was 70% of their income.

Let's see, $2 to make a CD... $18 retail price... Yeah, that's 70% all right.

And EMI's Annual Report for that year said they were the most efficient record company in the world.

though it cost $2 to make a cd, prices are higher than that for a few reasons:
The artist has to pay for studio time. This is okay for a veteran who could pretty much live in a studio if he wanted to, but there are other bands out there that can barely afford the time. it's easier for electronic artists and other artists that are technologically savvy and can use software and record in their basement, but this is not always the case.
Plus there is things like promotion costs and everything else that go with it...

...but the industry done fine when they sold cassette tapes for 8 bucks.

Regardless of the reason, a fall in music sales has to be a good thing. Less money to spend on fighting us

I agree piracy is probably not the primary cause of falling revenue, althrough its certinly not helping. The economy is going through a slow patch at the moment, sales in everything are down.

I have here my archiveal boxes. They contain approximately six hundred CD-Rs, and not one of them contains illegially copied music. There are plenty of other copyright violations, but no music. Unless you count those eminem parodies.

Piracy is just the scapegoat. Have to blame something. The alternative is admitting the management doesn't know what they are doing

eonblue000 -- The ARTIST pays for the production costs -- NOT the label. The ARTIST pays for the promotional costs -- NOT the label.

These costs are deducted from the artists' royalties, which as we've seen, is $1.82 a CD if you get a 30% royalty rate.

So now we've accounted for $3.71 -- $1.89 for the manufacturing (which includes labor, packaging), $1.82 for the artist royalty, which includes production expenses and promotion. It ought to actually include the manufacturing costs, too, if I'm not mistaken. But let's gives the labels the benefit of the doubt.

And let's ignore for a moment that promotion is NOT a cost of goods sold, but falls under Sales, General and Administrative expenses, at least according to EMI's financial report.

We'll assume that perhaps the labels could sneak this back in as a cost of goods since they have to pay the artist royalty in order to produce the CD.

The most recent wholesale price I've seen is $12.04. 70% is 8.43.
We've accounted for $3.71.

So let's not forget mechanical royalties to the writer and publisher. At 12 songs, 8 cents each, that's 96 cents.
However, since the record label is the publisher, they're going to keep half of that as income. So only 48 cents is an expense.

Our CD total cost is up to $4.19.
What did they spend the other $4.24 on? Because the financial records CANNOT be false.

And here's the link to the financial data.
http://www.hoovers.com/annuals/9/0,2168,41769,00.html

EMI is the only actual record label whose financials are not buried in a corporate maze. They're a record company and that's pretty much it.

So come on, all you Princeton and Michigan Tech accounting students. Save your pals.

The government understands empirical data. They understand impassioned pleas, too, but the empirical data is always more heavily considered. It simply carries more weight.

I took a semester of computer science and spent five years doing accounting. If I take my information to the government, they're going to say, "Who the hell are you?"

But if even a couple of respected schools presented studies of the recording industry's accounting practices, who knows what those crazy college kids might find.

They don't have anything better to do than sit around and listen to pirated music anyway...

Thumbtack:
If you haven't seen CD singles or casette singles, then how is the popularity of a song determined these days? Surely not payola, that's illegal. Even if Don Henley does get billed for it.

Accordong to the RIAA, total units manufactured and shipped less returns has been a negative number for two years.

If they are shipping any, they're getting more returned than they can produce (or are willing to produce).

By the simple act of bringing this into the argument, Berman has introduced intentionally misleading information.

I was talking about CD Singles in the post immediately above.

And here's a great link to information on recording industry accounting practices.

http://www.recordingartistscoalition.com/rip.html

I agree thumbtack about the casette figures...

it's a GREAT news !!! that means, RIAA is losing!!! Hooray!!

I wonder how many % are due to the boycotts?? I'd like that it would be all 7 !!! (and, that it will raise).

Go On, Boycott!!

Hey let's pirate their fucking videos too!

is that 236 million COPIES.. or 236/x BURNERS? (re the case where the actual number of copies came from the fact that a burner was 4x, therefore it was called 4 burners).
oh such bullshit these people say. I guess it's easy when you own all the toys to say that someone's stealing yours. Basicaly tho, we (people on this site and others like it) can ALSO say that contributing factor(s) to the decline of sales were also the CRAP available currently and the switch by many to indie or smaller label bands. The RIAA has no idea how much music is out there.. they only catalogue what's theirs (by hook, or crook or law), but I'm sure that OVERALL music purchases were up if you include indie and/or smaller labels that aren't members of the RIAA.
Wish someone would post THAT info. I'd like to see how those little guys are doing
ttmmm

What they neglect to tell you is the real reason that THEIR record sales are down is because indy label record sales are up...

http://www.csmonitor.com/2003/0411/p13s02-almp.html

Gotta love the big labels one-sided stories.

For some reason, the software appended a at the end of my link...the story is there.

Hey, they stole my Independents' Day idea! Dammit. Should have copyrighted it. Wait. That's a phrase. It just needs a trademark.

Independents' Day (TM) 2002 George Ziemann

I would estimate five times 10 to minus 4 percent is due to any form of RIAA boycott

Its just competition from other entertainment - DVDs are doing great (unfortunatly - I also hate movie industry and computer games are selling as well as always.