In news that should cheer digital download companies, the International Federation of the Phonographic Industry (IFPI) reports that digital music sales matched those of “physical format sales.” Most of those physical sales are compact disks (CDs). However, the news should be muted due to the piracy of digital format products.

The authors of the IFPI Digital Music Report 2015 wrote:

Digital revenues rose 6.9 per cent to US$6.9 billion, representing 46 per cent of all global music sales and underlining the deep transformation of the global music industry over recent years. The industry’s overall global revenues in 2014 were largely unchanged, falling just 0.4 per cent to US$14.97 billion (US$15.03 billion).

Commenting on the trend, the authors wrote:

Subscription services are now at the heart of the music industry’s portfolio of businesses, representing 23 per cent of the digital market and generating US$1.6 billion in trade revenues. The industry sees substantial further growth potential in the subscription sector, with new services advancing in 2015 led by three major global players: YouTube’s Music Key, Jay Z’s TIDAL and Apple’s expected subscription service.

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The IFPI also offered another view on the digital music transformation. Its experts wrote:

The music industry is a business whose success depends on certainty in the legal environment and on copyright law. This is a constant and ever-changing challenge — the music market internationally continues to be distorted by unfair competition from unlicensed services.

IFPI estimates, based on comScore/Nielsen data, that 20 per cent of internet users worldwide regularly access unlicensed services. This estimate applies only to desktop-based devices: it does not include the emerging, but as yet unquantified, threat of smartphone and tablet-based mobile piracy as consumers migrate to those devices.

Digital piracy is the biggest single threat to the development of the licensed music sector and to investment in artists. It undermines the licensed music business across many forms and channels – unlicensed streaming websites, peer-to-peer (P2P) file-sharing networks, cyberlockers and aggregators, unlicensed streaming and stream ripping and mobile applications.

Based on the growing use of smartphones and tablets, piracy through those devices may be huge.

The move from CDs to digital platforms may be the new normal, but it has not helped fend off the industry’s greatest problem.

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