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Music industry sees CD revenues fall; games next?

By on May 23, 2008

According to the Financial Times yesterday, songwriters and publishers for the first time earned more from broadcasts and legal downloads of their music in 2007 than from the copyright from sales of CDs.

I believe that this is extremely significant. The MCPS-PRS Alliance, which collects royalties on behalf of musicians and record companies, collected £562.1m in 2007, of which CD sales represented £151.8m and “broadcast and online sources” represent £155.5m.

It’s not a complete step change. Much of the broadcast revenue comes from television (£89.9m) and radio (£49.5m), so legal online sales still only generate a tenth of the revenues of CD sales.

But it shows that music companies are having to be more creative at finding new outlets for their music in the face of a fundamental shift in the way in which users choose to consume their music entertainment.

As I have argued before (in The games industry should learn from the music industry’s mistakes), these issues – of changing consumer habits, shifts in revenue sources and in what aspects of entertainment are deemed worth paying for by punters – are going to engulf the music industry and then jump across into ours.

These statistics only confirm that it is happening.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: