The economic crisis exacerbates the recession in the music industry. Recorded music sales have been in sharply decline for years. Digital music offerings on the Internet and via mobile phone cannot compensate for the losses. One reason: The wrong licensing policies of the record labels.
The music industry cannot escape the general economic and financial crisis. In 2008 a dramatic slump in sales of recorded music for nearly all markets was reported. But the economic crisis only reinforces a downturn in the market for recorded music that begun already in the late 1990s. Thus, in the largest music markets the CD unit sales dropped in the period from 2000 to 2008 between 35% (United Kingdom) and 59% (USA). This recession, however, is a symptom of a paradigm shift from music delivered in form of a physical product to music as a service delivered in form of online and mobile music offerings.
The digital market cannot compensate for losses in the recorded music segment.
For now, however, the market growth in digital music (downloads, streaming, ring tones etc.) is unable to compensate for the losses in the recorded music segment. Despite or perhaps because of the economic crisis, the business with MP3s & Co is unstoppable. In the U.S. the share of digital music sales was as high as 39% of total sales in 2008. And the major music companies highlighted in their most recent annual reports an impressive growth in non-physical music sales. At Atlantic Records, a subsidiary of Warner Music Group, digital music sales surpassed the CD-sales for the first time in 2008. But the growth in digital sales can not compensate for all music majors’ losses in the CD segment.