Recorded music industry revenues have grown for the first time in 13 years thanks to digital download services such as Apple's iTunes, according to the International Federation of the Phonographic Industry (IFPI).
The IFPI's Digital Music Report 2013, which was published on 26 February, revealed that global recorded music revenues rose 0.3 per cent in 2012 to $16.5 billion, boosted by downloads, subscription and other channels. This represents the first year of industry growth since 1999.
Digital revenues were up 9 per cent in 2012, and IFPI says that most major digital revenue streams, namely downloads, subscription and advertising-supported, are on the rise. Digital revenues now account for 34 per cent of global industry revenues, while download sales represent around 70 per cent of overall digital music revenues.
The increase could in part be due to the global expansion for digital retailers who's major international services now reach more than 100 countries, compared with 23 at the beginning of 2011.
"It is hard to remember a year for the recording industry that has begun with such a palpable buzz in the air," said chief executive of IFPI Frances Moore. "These are hard-won successes for an industry that has innovated, battled and transformed itself over a decade. They show how the music industry has adapted to the internet world, learned how to meet the needs of consumers and monetised the digital marketplace."
Apple's iTunes, which is available in 119 countries, sold its 25 billionth song earlier this month, and is the number one digital music provider in many countries.
IFPI's report notes that unfair competition from unlicensed music services remains a barrier to further growth for music sales. The company estimates that 32 per cent of all internet users still regularly access unlicensed sites.
"Our markets remain rigged by illegal free music," said Moore. "This is a problem governments have a critical role to play, in particular by requiring more cooperation from advertisers, search engines, ISPs and other intermediaries. These companies' activities have a decisive influence in shaping a legitimate digital music business."
However, 57 per cent of those who use unlicensed services have that "there are good services available for legally accessing digital music," according to research by Ipsos MediaCT across nine markets in four continents.
Consumer satisfaction with licensed music services appears to be high, with 77 per cent of users of such services rating them as excellent, very good or fairly good. A total of 62 per cent of internet users in Ipsos MediaCT's research have used a licensed digital music service in the past six months. Among consumers aged 16-24, this figure increases to 81 per cent.
"Pirate services are clunky and old-fashioned," said Rob Wells, president of Universal Music Group's global digital business. "They're being usurped by mass consumer migration to smartphones and access to millions of tracks from legitimate subscription services… The pirate option just cannot offer that complete consumer experience."
Piracy certainly seems to be becoming less popular, with NPD Group's Annual Music Study 2012 revealing that the number of music files being illegally downloaded was 26 per cent less in 2012 than in 2011.
A total of 40 per cent of the people surveyed for the study who said that they had illegally downloaded music in 2011 said that they didn't do so in 2012.
"Music is helping power social media platforms," the IFPI report adds. "For example, nine in 10 of the most watched videos of all time on YouTube are music videos, led by PSY's Gangnam Style which has been viewed more than 1.2 billion times. Nine in 10 of the most liked people on Facebook are artists. Seven of the top 10 most followed people on Twitter are artists."