Recording Industry Announces 2001 Year-End Shipments

Recent Study Illustrates Internet Piracy's Impact On Music Market

4-Mar-02

The Recording Industry Association of America (RIAA) announced that the number of units shipped domestically from record companies to retail outlets and special markets (music clubs and mail order) fell 10.3 percent in 2001. Specifically, total U.S. shipments dropped from 1.08 billion units shipped in 2000 to 968.58 million in 2001 -- a 10.3 percent decrease. The dollar value of all music product shipments decreased from $14.3 billion in 2000 to $13.7 billion in 2001 -- a 4.1 percent decrease, according to figures released by the RIAA. ""This past year was a difficult year in the recording industry, and there is no simple explanation for the decrease in sales. The economy was slow and 9/11 interrupted the fourth quarter plans, but, a large factor contributing to the decrease in overall shipments last year is online piracy and CD burning,"" said Hilary Rosen, President and CEO of the RIAA. ""When 23 percent of surveyed music consumers say they are not buying more music because they are downloading or copying their music for free, we cannot ignore the impact on the marketplace."" According to recent surveys among a total of 2,225 music consumers between the ages of 12 and 54, commissioned by the RIAA and conducted by Peter Hart Research Associates, 23 percent of those music consumers surveyed said that they did not buy more music in 2001 because they downloaded or copied most of their music for free. Some have questioned whether downloading results in sales displacement. In addition to the actual claims of the consumers about their own buying patterns, there has also been explosive growth in the copying of that downloaded music onto a burned CD or a portable MP3 player. In the 2001 survey, over 50 percent of those music fans that have downloaded music for free have made copies of it. Just two years ago, only 13 percent copied it onto a portable device or a CD burner. Coinciding with the increase in copying music, the study found that ownership of CD burners has nearly tripled since 1999; in 2001, two in five music consumers owned a CD burner compared to 14 percent who owned one in 1999. ""Global piracy on the physical side costs the recording industry over $4 billion a year. That doesn't even include losses online. While the physical piracy problem is not new, our markets continued to expand. Now that consumer purchasing is threatened as well, the impact of all piracy is greater."" concluded Rosen. The RIAA's year-end numbers, which are compiled quarterly by the accounting firm of PricewaterhouseCoopers LLP, represent direct data from companies that distribute approximately 90 percent of the prerecorded music in the United States. To calculate unit shipments and dollar values for the remainder of the market, PricewaterhouseCoopers utilizes retail sales data from SoundScan to estimate shipments by non-reporting companies.  For more information about the RIAA, visit www.riaa.org.

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