The battle-weary music industry surveyed the wreckage of another dismal six months on Wednesday as global data showed music sales tumbled almost 11 percent, piling more pressure on music companies to do deals to survive.
Despite big hits from pop queen Christina Aguilera and rapper 50 Cent, Internet downloading and CD-burning continued to ravage the industry, dragging music sales down to $12.7 billion in the first half of this year, a leading industry body said.
However, the International Federation of the Phonographic Industry (IFPI) indicated the rest of the year may not be so gloomy, with a strong release schedule expected to limit the slide in CD sales to between seven and eight percent.
Shares in EMI Group, the world’s third-biggest music company, climbed more than 6 percent in London as investors lapped up the prospect of a less dramatic slide in the second half and the absence of a warning ahead of results in November.
Nevertheless, the IFPI figures are likely to turn the heat up on a series of negotiations between top music companies as they scramble to cut costs after three years of declines.
EMI, the only stand-alone music company among the big five, said last week it was in talks about taking over AOL Time Warner’s recorded music arm, in a deal that sources familiar with the situation say could be worth more than $1.5 billion.
AOL Time Warner’s Warner Music has also been exploring a joint venture with German media rival Bertelsmann’s music arm BMG. However, those talks have gotten bogged down and Bertelsmann is now courting Sony Music, other sources said.
THROUGH THE WORST?
IFPI Chairman Jay Berman said the United States, Japan, France and Germany had shown dramatic declines, forcing the industry to fight battles on multiple fronts.
“It’s a very difficult landscape to fight back against but we are. We have gone through the worst period and we have enough positive signs about how online business models can go forward,” Berman told Reuters.
The IFPI said in its interim report that global recorded music sales fell 10.9 percent in value terms from a year ago and 10.7 percent in unit terms, outstripping a 7.2 percent fall in 2002.
Global sales of CDs, which make up almost 90 percent of total sales, fell 11.7 percent in the first six months.
“The second half makes up 60 percent or more of sales for the whole year and we have a strong release schedule, so I would expect CD sales to even out and fall 7 to 8 percent for the whole year,” Berman said.
Releases from Beyonce, Bon Jovi, David Bowie, Dido, Enrique Iglesias, Limp Bizkit, Kylie Minogue, Nickelback, Pink, REM and Sting are scheduled for the second half, the trade body said.
Among bright spots in the first half, the IFPI noted a string of hits in a traditionally thin release period including Aguilera’s “Stripped,” 50 Cent’s “Get Rich or Die Tryin”‘ and Coldplay’s “A Rush of Blood to the Head.”
Sales in Austria, Finland and Russia rose, while UK album sales posted gains and Hong Kong and Australia made a recovery. In terms of format, DVD music took off while legitimate online music broadened its reach, the IFPI said.