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Global music sales spin lower
LONDON, England -- Sales of recorded music slumped worldwide last year due to Internet piracy, increased competition from other entertainment sectors and a decline in consumer spending, an industry group said Wednesday. Despite a string of hits from the likes of Eminem, Norah Jones and Shakira, the International Federation of the Phonographic Industry (IFPI) said global revenue fell 7 percent to $32.2 billion in 2002. The sale of CD albums -- which accounts for 89 percent of the market -- slipped 6 percent, the IFPI said. Singles and cassettes were hardest hit, dropping 16 percent and 36 percent respectively. The London-based group said sales are expected to slump by a further five percent this year even as the industry intensifies its fight against piracy, and continues to cut costs and diversify its products. "This year's figures hold no surprises. Widespread use of illegal sites, made easier with the growth of broadband access in the major markets, is affecting an industry that is also having to compete with increased sales of other entertainment formats such as DVD films and new video game consoles," IFPI Chairman and Chief Executive Jay Berman said in a statement. "Meanwhile, the release schedule for the past year was very strong and although major albums are selling in smaller quantities, we have seen some very strong albums from the likes of Eminem, Shakira, Norah Jones, Avril Lavigne, Nickelback and Red Hot Chili Peppers." The slump has cut into the profits at the big five music companies -- Universal Music, Warner Music, Sony, BMG and EMI -- forcing them to cut costs, axe B-list artists and develop new technology to battle online piracy and unauthorized copying on CDs. However, the IFPI said one positive trend in industry was the growth in sales of music videos, which saw unit sales rise 12 percent in 2002 -- due mainly to the increased use of DVDs. The industry group said sales of DVD videos rose 58 percent last year, while VHS sales fell 42 percent. DVD videos are expected to have a growing impact of music sales in the coming years, said the IFPI, whose members include 1,500 record companies in 76 countries. The IFPI said U.S. music sales declined for a third straight year in 2002, with 10 percent fewer album units being sold. Japan continues to suffer from Internet piracy and the illegal copying of CDs. The overall music market shrank 9 percent last year. Sales across Asia were down 10 percent. The UK market was stable in 2002 after five years of growth. While the number of units sold remained the same, price reductions meant the value of sales fell 3 percent. In other parts of Europe, Spain was the hardest hit by CD piracy, with sales plunging 16 percent in 2002. German sales were down 9 percent last year -- the fifth consecutive annual decline. France bucked the downward trend as sale rose 4 percent. Italy, Portugal and Norway has flat sales in 2002.
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