"The record industry has experienced some gains so far in 2004, but we are rising out of a deep hole and still have a long way to go."
——Mitch Bainwol, RIAA Chairman/CEO


Shipments of CDs and DVDs To Retail, Legal Downloads Increase, but Advances Do Not Erase Multi-Year Decline
It may not qualify as a full-fledged turnaround, but at least for the first six months of the year, the record industry stopped the bleeding.

Full-length CD shipments to retail outlets increased by 10.2%, compared with the first half of 2003, the first time in five years that the first half of the year has experienced that kind of positive flow. DVD music videos and licensed digital downloads also showed impressive growth, according to new data announced today by our good friends at the RIAA, who took time out from subpoenaing lists of Verizon DSL subscribers to give us some good news for a change.

Unfortunately, improvement in the performance of the CD format was not enough to make up for a multi-year period of decline. Compared to 2001, CD shipments to retail remained down by 4.3%, and overall product shipments to retail are down 9.8%.

Overall, CDs and all other audio and video music products shipped to retail increased by 8.5% in the first six months of 2004 (289 million units were shipped in the first half of 2004 vs. 267 million in the first half of 2003), while the dollar value of those shipments increased 4.5%, from $4.493 billion to $4.697 billion. When including direct and special markets, the overall percentage growth for the first half of 2004 for units shipped, compared to a similar time frame in 2003, is 4% (349 million units vs. 336 million). The overall dollar value increase for all units shipped was 3.6%, from $4.876 billion to $5.05 billion.

In spite of gains made in some areas, the industry's top-selling albums, not coincidentally, the most heavily pirated, remained significantly down as compared to 2001: Top 50 albums shipped 16.7% less in the first half of 2004, and the Top 100 albums shipped 19.7% less, although both categories are reportedly showing a bit of an uptick during the last few months.

"The record industry has experienced some gains so far in 2004, but we are rising out of a deep hole and still have a long way to go," said RIAA Chairman/CEO Mitch Bainwol after taking out a restraining order on one Bob Lefsetz. "Piracy, both online and on the street, continues to hit the music community hard, and thousands have lost their jobs because of it."

He went on to detail how record companies continued to develop innovative business strategies to combat online piracy and bootlegging, including aggressively making music available to a variety of authorized digital services, introducing new formats and offering an array of exciting new releases.

As a reflection of a growing legitimate digital music marketplace, the RIAA, for the first time, has included digital downloads in its semi-annual shipment report. For the first half of 2004, there were 58.6 million single tracks downloaded or burned from licensed online music services, a total not included, for obvious reasons, in the "Units Shipped to Retail" category.

"The foundation for success is in place," said Bainwol. "Continued growth requires innovative business models, aggressively making music available to legitimate digital services, public education, appropriate legislation and a strong measure of deterrence. We still have our work cut out for us, but the encouraging news behind these numbers confirms we are on the right track. Now how do you work this KaZaa thing again?"

DVD videos grew 101%, up to 11.2 million units in the first half of 2004 compared to 5.6 million last year, with a 54% increase in value compared to the year prior. The overall music video marketplace, when including tapes and DVDs shipped to retail as well as direct and special markets, grew by 91.6% (12 million units vs. 6.3 million).

The 2004 statistics are supplied by PricewaterhouseCoopers, LLP to the RIAA and are broken down by U.S. music shipments from record companies to retail outlets, and all U.S. music shipments from record companies (including retail shipments and direct-to-consumer sales and special markets). Dollar values are based on suggested retail list price for the record companies' shipments.