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"Illegal ‘file-sharing’ continues to adversely impact the sale of physical CDs. We believe the use of these illegal peer-to-peer services is hurting the music industry’s efforts to distribute music online in the way consumers demand."
——Cary Sherman, RIAA President
RECORD SALES CONTINUE
TO PLUMMET
RIAA Six-Month Report Shows Decline of Almost 16% in Total Shipments, 12% Decrease in Dollar Value
Read it and weep.

The record industry continues to bleed big-time, according to sales figures released today by the RIAA for the first six months of 2003.

Shipments of music products to retail outlets declined nearly 10% through June, representing
a 9% drop in dollar value compared with the first six months of last year.

The RIAA attributed the decrease, as they have for awhile now, to music piracy on peer-to-peer networks and illegal CD copying. Not bad music, incompetent management or the continued consolidation of labels, radio and retail, but they may as well have.

Said RIAA President Cary Sherman before dusting office computers for fingerprints of anyone downloading KaZaA software. "While there are other factors contributing to the decline of music shipments in 2003, including the fact that there are significantly fewer music retail locations," he claims, "illegal ‘file-sharing’ continues to adversely impact the sale of physical CDs. We believe the use of these illegal peer-to-peer services is hurting the music industry’s efforts to distribute music online in the way consumers demand."

The RIAA recently announced that it would begin gathering evidence and preparing lawsuits against individual computer users who are illegally offering to "share" substantial amounts of copyrighted music over peer-to-peer networks.

"The number of ways fans can get music online in legal, consumer-friendly and high-quality sites is growing each week. In addition, we look forward to exciting releases from new and established artists in the second half of the year," Sherman added, citing Black Rebel Motorcycle Club, Mary J. Blige, David Bowie, Missy Elliott, Fuel, Alicia Keys, Ludacris, John Mayer, Martina McBride, Sarah McLachlan, P.O.D., Iggy Pop, Bonnie Raitt, Seal and Sting.

According to PricewaterhouseCoopers LLP, CD shipments to retail markets decreased nearly 10%in the first six months of 2003. A marked decline in direct and special market sales led to a 15.3% drop in total CD shipments, which includes shipments to retail and direct and special markets in the first six months of 2003. The first-half decline in CD shipments follows last year’s 7% drop in overall CD shipments.

All music format shipments (total U.S. music shipments), including to direct and special markets, dropped 15.8% from 398.5 million units (first half of 2002) to 335.6 million units (first half of 2003). In dollar value, this represents a 12% decrease, from $5.5 billion to $4.8 billion. Total 2002 sales were $12.6 billion. If the first-half figures hold, the total U.S. dollar value of shipments will sink below $10 billion for the first time in a decade, since 1992.

The only formats to show growth were CD Singles, up 173.5% and DVD Video, up 26.2%. Other genres suffered losses, including CD (down 11.8%), Cassette (down 54.3%), Music Video (down 68%) and DVD Audio (down 56.3%).

The RIAA’s mid-year shipment numbers are compiled quarterly by PricewaterhouseCoopers LLP, representing direct data from companies that distribute approximately 90% of the prerecorded music in the U.S.

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