The IFPI recently published their latest digital music report. Amongst their claims “illegal downloading” outperforms legal downloading by a ratio of 20:1, and that because of this, the recording industry has lost US$3.7 billion. Picking apart these ideas reveal that they may be very misleading.

The very idea that music sales are declining seems to leave record companies scratching their heads. They can’t understand why people who once paid $20 for an album are no longer willing. The industry seems to think that music should be valued similar to movies. Is an album, which costs little to produce, really worth the same as a movie, which costs a fortune, often 200x more, to produce? DVDs and music CDs are often very similarly priced.

Highlights from the report include:

* Tens of billions of illegal files were swapped in 2007. The ratio of unlicensed tracks downloaded to legal tracks sold is about 20 to 1

* The growth rate of around 40% in digital sales did not offset the sharp fall in CD sales globally, meaning that the overall market for the year will be down on 2006

* Global digital music sales are estimated at approximately US$2.9 billion in 2007, a roughly 40% increase on 2006 (US$2.1 billion)

* Research by IFPI debunks a myth about illegal P2P services: in fact, fans get better choice on legal sites. IFPI conducted research with a sample of 70 acts on the legal site iTunes and on the copyright infringing service Limewire. In 95 per cent of searches the artists requested had more songs available on iTunes than on the leading P2P service.

* The first-ever global music download sales chart is topped by Avril Lavigne, who sold 7.3 million track downloads of her song Girlfriend across the world in 2007

* Single track downloads, the most popular digital music format, grew by 53% to 1.7 billion (including those on digital albums)

* Digital sales now account for an estimated 15% of the global music market, up from 11% in 2006 and zero in 2003. In the world’s biggest digital music market, the US, online and mobile sales now account for 30% of all revenues

* The music industry is more advanced in terms of digital revenues than any other creative or entertainment industry except games. Its digital share is more than twice that of newspapers (7%), films (3%) and books (2%)

* There are more than 500 legitimate digital music services worldwide, offering over 6 million tracks – over four times the stock of a music megastore

* Progress in the digital music market is being hampered by lack of interoperability between services and devices, and lack of investment in marketing of new services