Wednesday, April 22, 2009

IFPI figures express surprise at drop in earnings

The latest batch of figures released from the IFPI show European music sales dropping in value:

Despite global digital sales growing 24.1 % to $3.78bn and performance income by 16.2% last year, total sales still finished down 8.3% at $18.4bn after a 15.4% collapse in physical sales.

There are some who might say that managing to only lose 8.3% of your business in a luxury product market during a global recession which is the worst since headline writers first started overstating the depths of recessions is pretty good.

And, besides, why should this drop in value of sales worry us? A download single can be as cheap as 30p; a physical single will probably retail for at least two quid. Even should someone buy the a side and the b side, you're looking at perhaps 60p, probably no more than £1.60, for a download, compared with at least two quid. "Moving to selling cheaper products brings in less money". Isn't, for a company, the profit the thing?

It also forgets to engage with that simple truth we keep repeating: you are no longer selling a scarce product. You no longer control the supply. You are no longer a monopoly. Of course you will make less money. I'm sure your tables and charts are meant to worry us, to try and convince us there's a problem. But actually, your figures just show that - in music, at least - the free market appears to be working as GCSE Economics students would expect.

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