CD Wrap Up For First Half Of 2004

(CelebrityAccess MediaWire) —
The music industry is showing some signs of a rebound in the first half of 2004 with full-length CD shipments to retail outlets increasing by 10.2 percent compared to the same time period in 2003. It is the first time in five years that the first half of the year has experienced an overall increase in shipments of all formats combined. DVD music videos and licensed digital downloads also showed impressive growth, according to new data compiled by the Recording Industry Association of America (RIAA).

However, improvement in the performance of the CD format was not enough to make up for a multi-year period of decline. Compared to 2001, CD shipments to retail remained down by 4.3 percent and overall product shipments to retail are down 9.8 percent.

Overall, CDs and all other audio and video music products shipped to retail increased by 8.5 percent in the first six months of 2004 (289 million units were shipped in the first half of 2004 vs. 267 million in the first half of 2003), while the dollar value of those shipments increased 4.5 percent. When including direct and special markets, the overall percentage growth for the first half of 2004 for units shipped, compared to a similar time frame in 2003, is 4.0 percent (349 million units versus 336 million). The overall dollar value increase for all units shipped was 3.6 percent.

In spite of gains made in some areas, the industry's top-selling albums, which are among the most heavily pirated, remained significantly down as compared to 2001: top 50 albums shipped 16.7 percent less in the first half of 2004 and the top 100 albums shipped 19.7 percent less. However, there has been some improvement in these categories in the last six months of 2004.

"The record industry has experienced some gains so far in 2004, but we are rising out of a deep hole and still have a long way to go," said Mitch Bainwol, Chairman and CEO of the RIAA. "Piracy, both online and on the street, continues to hit the music community hard, and thousands have lost their jobs because of it."

During the first half of 2004, record companies continued to develop innovative business strategies aggressively making music available to a variety of authorized digital services, introducing new formats and offering an array of exciting new releases.

At the same time, the record industry, the RIAA and its partners in the music community have continued a variety of public education efforts, including: joining with the FBI to unveil a new anti-piracy warning and seal; expanding the acclaimed "I Download…Legally" media campaign; and working with the university community to develop new programs to educate students about intellectual property laws, discourage illegal peer-to-peer use, and offer legitimate online music alternatives.

The RIAA, on behalf of the major record companies, has also continued and expanded legal efforts against individual file sharers. Copyright infringement lawsuits against thousands of illegal file sharers have sent a strong and essential note of deterrence and stemmed the wildfire-like growth of illicit peer-to-peer network use.

As a reflection of a growing legitimate digital music marketplace, the RIAA, for the first time ever, included digital downloads in its semi-annual shipment report. For the first half of 2004, there were 58 million single tracks downloaded or burned from licensed online music services

"The foundation for success is in place," said Bainwol. "Continued growth requires innovative business models, aggressively making music available to legitimate digital services, public education, appropriate legislation and a strong measure of deterrence. We still have our work cut out for us, but the encouraging news behind these numbers confirms we are on the right track."

New formats such as music videos continued to show impressive growth. DVD videos grew 101 percent, up to 11.2 million units in the first half of 2004 compared to 5.6 million last year, and a 54 percent increase in value compared to the year prior. The overall music video marketplace, when including tapes and DVDs shipped to retail as well as direct and special markets, grew by 91.6 percent (12 million units vs. 6.3 million).

The 2004 statistics are supplied by PricewaterhouseCoopers, LLP to the RIAA and are broken down by U.S. music shipments from record companies to retail outlets, and all U.S. music shipments from record companies (including retail shipments and direct-to-consumer sales and special markets). Dollar values are based on suggested retail list price for the record companies' shipments. –Bob Grossweiner and Jane Cohen

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