Digital Music Sales Worldwide Doubled in 2006 to $2 billion

Global digital music sales almost doubled in 2006 to $2 billion, or about 10% of all music sales, from 5.5 % in 2005, according to The International Federation of the Phonographic Industry (IFPI).  The report expected digital sales to account for almost 25% of all sales worldwide by 2010. 

The report showed that growth in digital sales in 2006 has slowed compared to 2005, when sales nearly tripled to $1.1 billion from $380 million in 2004. IFPI estimated that the overall music market in 2006 had fallen approximately 3%.

Single track downloads totaled nearly 795 million in 2006, up 89% on the 420 million digital singles sold in 2005. 

  • The United States accounts for the bulk of those sales, with 582 million single tracks sold digitally in 2006, up 65% from 2005 (Nielsen SoundScan). 
  • Digital albums now account for 6% of all album sales in the US and grew faster than single tracks in 2006. 
  • iTunes, the leader in online downloads, has sold over 2 billion tracks since its launch in April 2003 and more than 1 billion in 2006 alone. 
  • The U.K. is the world's second-largest market for digital music sales, with 53 million single track downloads sold in 2006, double the number sold in 2005.

Music subscription services such as Rhapsody, Napster and eMusic now reach 3.5 million consumers worldwide, growing by 25% in the last year, with the majority of subscribers located in the US. Music subscription services accounted for 7% of digital revenues in the first half of 2006.

The number of tracks available online doubled to reach over 4 million in the last year, compared to around 150,000 CD albums available in the biggest 'bricks and mortar' music stores

There are nearly 500 online music services available in over 40 countries worldwide. 

Portable music players help drive digital music consumption. Portable player sales jumped 43% to around 120 million in 2006

New revenue streams and business models emerge as Social networking sites exploded in popularity while advertising-supported models such as video licensing on Yahoo! Music and MSN emerged as a potentially exciting revenue stream for record companies. 

Classical music was the fastest-growing music genre in the US, growing by 23 % in the US. 

Mobile music has also attracted fans in India, which is one of the fastest growing wireless services market in the world. Some 55 million handsets were sold in 2006, up 71% from 2005 (Consumer Electronics Association). Soundbuzz launched India’s first full song and video mobile download service in May 2006. The Indian industry has grown since then to 10,000 over-the-air full song downloads per day across all mobile carriers, according to Soundbuzz.

China has a small digital music business but, with over 430 million mobile subscribers, fast-growing broadband and potentially massive consumer demand, the country has the potential to throw off historically ruinous levels of physical music piracy and make the “leap to digital”.

Mobile music accounts for 90% of the digital sales in Japan, although online music sales doubled to roughly 22 million in 2006 after the launch of Apple Inc.'s iTunes there in 2006. Mobile is also the dominant digital music format in India and South Korea.

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