Recently released numbers by the IFPI (pdf) and RIAA (pdf)
show continued losses in physical formats, varying success in mobile
and slowing digital growth as markets mature. Fueled by a large drop in
CD sales and lower wholesale values, North America led the four global
territories (Europe, Asia and Latin America are the others) in total
trade revenue decline.



North America had a total of $4.98 billion in
recorded music trade revenue in 2008. That represented a drop of 18.6%.
Trade revenue from physical - nearly all of it from CD sales - dropped
31.2%. The drop in trade revenue from physical formats is much larger
than the drop in unit sales. Europe, whose digital market is less
mature than the U.S. market, experienced a 36.1% increase in digital
trade revenues while physical format revenues dropped only 11.3%.
Globally, physical revenue dropped 15.4% and digital revenue climbed
24.1%.



Digital revenue growth is coming almost
entirely from digital downloads. Mobile revenue has dropped slightly
and ad-based services are providing little revenue at this early stage.
Some mobile bright spots have been overshadowed by rops in areas.
According to the RIAA, a 36% increase in mobile downloads and an 18%
rise in ringback tones was more than offset by a 17% decrease in
ringtones.



Overall, there was a 6.5% decrease in mobile unit
shipments (downloads) and 7.3% decline in mobile's retail value.
Another part of digital revenue is subscription services. Mobile
subscriptions continue to mirror PC-based subscriptions in their
limited popularity. The RIAA put the value of U.S. subscription revenue
at $188.2 million, a 6.5% decline from 2007.



Digital has the opportunity to offer better margins
than physical formats. Even though less trade revenue is being
collected, improved margins from digital sales offer hope for a soft
landing as total revenue bottoms out. There are still burdensome costs
to bringing music to market, but losing CD sales for digital sales
means eliminating the high cost of in-store marketing as well as the
obvious costs of manufacturing, storing and distributing physical
product. As the size of record industry continues to contract, it
adjusts to the realities of lower revenues and more efficient digital
distribution.



For the 2008 numbers, the IFPI included revenues from
such new digital segments as ad-supported services, ringtones and
bundles services. To present an accurate year-over-year comparison,
those revenues were retroactively added to the 2007 numbers.

LINK (via Billboard)