This is the seventh IFPI Digital MusicReport. I you compare it to the rstreport published in 2004, you cansee a transormation in a businesswhich has worked with the advanceo technology, listened to the consumerand responded by licensing its musicin new ormats and channels.In 2009 globally, or the rst time, morethan one quarter o record companies’revenues came rom digital channels.Fans can acquire tracks and albumsin ways inconceivable a ew yearsago – rom download stores, streamingsites, subscription services, ree-to-usersites, bundled with their broadband or amobile phone handset.It would be great to report theseinnovations have been rewarded bymarket growth, more investment in artists,more jobs. Sadly that is not the case.Digital piracy remains a huge barrier tomarket growth. The slump in sales andinvestment in three major music marketsoutlined in the Report testiy to this andare a warning to the rest o the world.On the positive side, we have built aUS$4.2 billion digital business ull oconsumer-riendly services. On thenegative side, our global sales ell byaround 30 per cent rom 2004 to 2009,the growth o our digital sales is slowingand even the success stories reportedin this publication will struggle to surviveunless we address the undamentalproblem o piracy.Some ask, ‘why not give up the ght?’The answer is straightorward – rst, wecannot aord to. To continue to investin new artists, we have to tackle masspiracy. Second, we are progressing towardsan eective response. The progress isagonisingly slow or an industry which doesnot have a lot o time to play with – but it isprogress nonetheless.On page 20 o the Report, StephenGarrett, head o the production companyKudos, reers to a “climate change” inthe creative industries. That expressioncaptures the way the debate over digitalpiracy has evolved. You hear it aroundthe world: this is no longer just a problemor music, it is a problem or the creativeindustries: aecting lm, TV, books andgames. In this arena, the music industryis the pathnder o the creative industries,pioneering with new oerings or theconsumer. In 2009, Rupert Murdochsaid that the content kleptomaniacsshould not triumph and Microsot spokeout against piracy, ready to ban playersrom Xbox live i they had modied theirconsoles to play pirated discs – no threestrikes procedure needed!The thinking behind the debate hasalso crucially changed. It is about theuture o a broad base o creative industriesthat have huge economic importanceand employ vast numbers o people.This is one o the reasons why the French,UK and other governments are set onlegislation to curb illegal le-sharing.Another clear change is within the musicsector itsel. It was, until recently, rareor artists to engage in a public debateabout piracy or admit it damages them.In September 2009, the mood changed.Lily Allen spoke out about the impact oillegal le-sharing on young artists’ careers.When she was attacked by an abusiveonline mob, others came to her support.The mood o change is clearly reachinggovernments. In 2009, legislationrequiring ISPs to tackle P2P piracy wasadopted in France, South Korea andTaiwan. These countries established inlaw that it is appropriate or those whopersistently violate copyright, despiterepeated warnings, to ace a proportionateand eective sanction. This sets atremendous precedent in the protectiono intellectual property rights online. Inthe UK, as in France, it is understood thatgovernment has a key role in protectingcontent on the internet. Even in the mostcompetitive, innovative and market-drivenindustries, the market itsel can onlyoperate under the eective rule o law.This Report points the way to an optimisticuture or the music industry – greatoerings or consumers, more investmentin artists, economic growth and more jobs.Yet we are nowhere near that uture today,and we will not get there without a securelegal environment where creative work isrewarded and copyright thet is eectivelydeterred. To unlock the enormouspotential o digital music, we have toaddress piracy both on P2P networksand in other orms. That is where, today,we look to governments or action.
Music How, When, WhereYou Want It – But NotWithout Addressing Piracy
By John Kennedy, Chairman & Chie Executive, IFPI
“To continue to invest innew artists, we have to tacklemass piracy.”