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Digital downloads accounted for 40% of all music sales in 2009, according to Nielsen SoundScan. But, that was not enough to stop an overall drop in sales which reached 13% compared to 2008.

According to The Wall Street Journal, “Domestic album sales, including digital downloads, fell to 373.9 million units, a decline of 13% from 2008.” The increase in digital sales surprisingly rose only 8.3% for the year.

The drop on the sales of physical albums was expected. The slow increase in song downloads was not. It poses a threat to the ongoing success of services like Apple (NASDAQ:AAPL) iTunes and may eventually affect sales of multimedia players including the iPod.

There are several reasons that digital download sales did not do better last year. The first one is clear and that is the recession cut into the ability of people to pay for almost everything, even inexpensive entertainment. Sales should rebound in 2010 and 2011 if that is the case.

The more sinister problem is piracy. The IPFI, which represents the global music industry, reported early last year that illegal downloads were 95% of all consumer album and song usage. The organization said it would continue to pressure ISPs to find individuals who run software services that are used to steal music without payments to publishers and artists.

The level of piracy identified by the IPFI is much too great to be lessened much by better monitoring systems and persecution of law-breakers. It is too easy for people to us Pirate Bay and other illegal download services. Consumers have little or no qualms about listening to music that they have not paid for.

The leave the music industry to face a problem. Digital album sales may never grow quickly again. Piracy may be plaguing the business more and more each year.

Douglas A. McIntyre