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U.S. CD Shipments Up In 2004; Piracy Up Too

(CelebrityAccess MediaWire) —

After declining for four consecutive years, the number of CDs shipped domestically from record companies to retail distribution channels rose 5.3 percent — a 2.7 percent increase in value — in 2004, compared to the previous year, according to new data released by the Recording Industry Association of America.

At the same time, the record companies continued to feel the ongoing impact of piracy, both online via illegal downloading on peer-to-peer networks and traditional physical goods piracy. When compared to year-end numbers five years ago, the number of overall units shipped to retail in 2004 is down 21 percent. According to Soundscan, the top 100 albums, often the most heavily pirated, sold 194.9 million units in 1999, compared to 153.3 million units in 2004 (the 2004 numbers do represent a slight increase over 2003 –146.8 million units sold for the top 100 albums in that year).

Including other formats in addition to CDs, the number of overall units shipped to retail increased by 4.4 percent, representing a 3.3 percent increase in retail value compared to 2003. Counting all formats and all distribution channels, both retail and special markets distribution channels (music clubs and mail order), overall shipments increased by 2 percent in 2004, which represented a 2.5 percent increase in value. The increase is based on 814.1 million total units shipped in 2004, compared to 798.4 million in 2003.

At a time when the public’s enthusiasm for music is stronger than ever, the music industry continued to aggressively pursue a variety of new ways for fans to access music, including digital albums and singles, subscription services, Internet radio services, mobile music content such as the rapidly growing ring tuned marketplace, and new and innovative products such as DualDisc, which combines music, data (such as lyrics) and video on a single, two-sided disc.

The DVD music video format continues to experience extraordinary growth, with a 66 percent increase in music shipments from record companies to retail outlets and special markets distribution channels and a 51.8 percent increase in value (list price). The DVD music format represents approximately 5 percent of the overall recorded music market in list dollars.

Consumers also increasingly embrace legal digital music formats, with the popularity and traction of online music services continuing to expand. In 2004, just under 140 million licensed digital tracks were sold in the United States, according to the RIAA.

“There was some encouraging progress last year,” said Mitch Bainwol, chairman and CEO of the RIAA. “The public’s excitement for new music formats, coupled with the music community’s enthusiasm for distributing its content in new ways, have been a real spur to innovation for our industry.”

“At the same time, the legitimate digital business has not even begun to reach its potential. Those playing by the rules are being handicapped by bad actors who encourage and profit from illegal downloading and uploading of copyrighted works, ” continued Bainwol. “Piracy, online and on the street, continue to plague the music community and its partners in the technology sector. Those who are profiting from the theft of copyrighted music should be held accountable. Until the playing field is balanced, the legitimate online music business cannot truly flourish, and investment in new art will not reach its potential.”

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 by all U.S. music shipments from record companies (including retail shipments and direct-to-consumer sales and special markets). –Bob Grossweiner and Jane Cohen