Music will be saved by piracy crackdown, not iTunes: study

Downloading to remain niche market?

The music industry will remain flat for another two years – and when it does pick up, the music industry will have the crackdown on file-sharers to thank, according to a report.

The study, The Global Music Industry, from Informa Media Group predicts that music revenues will drop under $28bn next year, but will pick up in 2005, growing to around $32bn by 2008. It says that this will be because the industry will get a handle on file-sharing and put more stringent controls on CD copying, rather than because consumers will spend more on their music.

While the last few months have seen a spate of online song shops spring up and Apple iTunes' downloads selling faster than hot cakes, the report believes that although the sector will provide growth for record labels, it's cautious about overplaying its short-term significance. Informa believes that online music sales will rise in the next five years, but will only represent a total of around 12 per cent of the market as a whole, with digital sales only making up 5.7 per cent.

Simon Dyson, author of the report, said in a statement: "The music industry is in a bad way at the moment but the continued fall in the value of music sales is certainly not irreversible. The success of the new download services proves there is a viable market for legitimate digital sales, but the music companies must act decisively to stop the growth of the illegal services and the widespread copying of CDs."

Despite the fact that 2003 looks to be the fourth successive year of declining CD sales for the music industry, record label EMI announced better than expected half-year results – clocking up £960m of sales - but remained grim about the industry's future, predicting a drop of up to an eight per cent in sales next year.