Peter Kafka

Recent Posts by Peter Kafka

Newsflash: No One Buys Music on the Web–Except for the People Who Spent Billions Last Year

Web folk have a fairly justified suspicion of anything they hear from official music industry reps these days. But this stat seems about right to me: 95 percent of all songs downloaded on the Web last year were stolen, says the industry’s international trade group.

The IFPI estimates that some 40 billion tracks were stolen/shared last year, though it’s not entirely clear how the group came up with the math. Regardless of the methodology, that’s bad, right?

Depends on how you look at it. The IFPI also notes that people spent some $3.7 billion on digital music in 2008, which is up about 25 percent. Figure about half of that comes from Apple (AAPL), which moves about two billion tracks a year from its iTunes store. The remainder would be from mobile, with a very small smattering from services like RealNetworks’ (RNWK) Rhapsody and a few dollars spent on ad-supported services like News Corp.’s (NWS) MySpace Music, etc. (News Corp. is the owner of Dow Jones and of this Web site.)

But the standard summation still applies: The growth of digital has yet to replace the decline in physical sales–overall music sales dropped seven percent last year.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work