It's no surprise that digital music sales continue to grow. In 2006, digital music sales doubled to about $2 billion, roughly 10% of all music sales. Nonetheless, that increase failed to offset the pain of falling CD sales -- and since digital music sales had tripled in 2005, the increase actually represented a slowdown in sales growth.
The International Federation of the Phonographic Industry (IFPI), a global music industry trade association, reported the data, which included such granular details as an 89% increase in single-track legal downloads -- to 795 million -- in 2006. (Last July, Fool Anders Bylund reported on similar six-month data.)
The IFPI expects digital sales to comprise one-fourth of the market by 2010. Mobile downloads to cell phones, PDAs, or wireless-equipped players are another bright spot for the industry.
The trade association echoed concerns shared by record labels from Sony
Despite the industry's bellyaching, my Foolish colleagues have noted the industry's dirty secret: Legal digital downloads are extremely high-margin products for music companies, since they don't incur manufacturing or distribution costs. Despite piracy concerns, Apple's
The industry still faces plenty of challeges. The digital age makes it easier than ever for artists to eliminate the middleman, selling music directly to fans. Consider News Corp.'s
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