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Legal Music Sales Online Have Not Offset Piracy

by , 3:10 PM EST, January 17th, 2007

The International Federation of the Phonographic Industry (IFPI) said on Wednesday that online music sales doubled in 2006 to about $2B, but that as only 10 percent of all music sales, they failed to make up for reduced growth in sales as a whole. The story was published at Business Week online.

That well-known argument by the music industry says that piracy is the root cause of declining overall sales. But that is not the only possible explanation.

"We don't have the holy grail of digital (online) offsetting the decline of CDs as yet," IFPI Chairman John Kennedy said in London after the release of the IFPI's 2007 Digital Music Report. Mr.Kennedy said overall music sales fell approximately 3 percent in 2006. He also said that he hopes online sales will compensate for the decline of CD sales sometime in 2007.

Mr. Alex Zubillaga, Warner Music's executive vice president for digital strategy and business development was also quoted. He said that the music companies were complacent and needed to innovate. "We as an industry have had it too good for too long," Zubillaga said.

That observation seems to echo the feelings of many music customers.

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