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Reversing trend, world music revenue inches upward

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Tuesday, February 26, 2013 - 8:33 am

LONDON — More than a decade after online file swapping tipped the music industry into turmoil, record executives may finally be getting a sliver of good news.

Industry revenue is up. A measly 0.3 percent, but it's still up.

"For the global music business, it is hard to remember a year that has begun with such a palpable buzz in the air," said Frances Moore, whose International Federation of the Phonographic Industry put together the figures released Tuesday.

"These are hard-won successes for an industry that has innovated, battled and transformed itself over a decade," she said in a statement. "They show the music industry has adapted to the Internet world."

That adaptation has been a long time coming. Online song sharing popularized by services such as Napster at the turn of the millennium seriously destabilized the industry, which reacted with a barrage of lawsuits and lobbying. But the war on piracy failed to stem the tide of free music, and by the time executives finally began making legal music available through download services such as Apple Inc.'s iTunes, the industry was in a free fall.

Since its 1999 peak, the global music industry's revenues have crashed more than 40 percent. Tuesday's figures, which show a rise in global revenue from $16.4 billion in 2011 to $16.5 billion in 2012, are the first hint of growth in more than a decade.

Mark Mulligan, of U.K.-based MIDiA consulting, warned that Tuesday's figures did not mean the industry had put its misery years behind it.

"We're probably near the bottom," he said, "but it's so marginal we could easily have another year or two where it could get worse."

The physical music market continues to contract, losing another $500 million in revenue between 2011 and 2012, according to Tuesday's IFPI figures. The industry group has placed its bets on downloads, streaming, and subscription services to make up for lost ground, but there's still a long way to go.

Downloads and streaming audio now account for most of the music sold in the United States and Scandinavia, but physical music — everything from vinyl records to DVDs — still accounts for the majority of industry revenue worldwide.

Mulligan said he believed some of the lost revenue may never be recovered, with many casual users who used to buy the odd CD turning to free services such as YouTube, television music channels, or Internet radio instead.

"This is a case of managed decline," he said, predicting "a sustainable but smaller market built around more engaged music fans."