The global recorded music sales tanked in 2008, according to figures from the music trade body IFPI, which finally confirmed what we all expected. The worldwide decline was led by a sharp 31 percent drop-off in physical format sales (mainly CDs) in the US. Even though US digital sales grew 16.5 percent it couldn’t make up the shortfall, and overall US sales were down 19 percent.

The trends were similar in the Europe where sales fell by 6.3 percent.

It’s not all gloom and doom though. Sales were up 1 percent in Asia, because it was the one region where the growth in digital sales managed to make up for the fall in CD sales. That will likely be due to the fact that CD sales in some Asian countries has never been properly developed due to piracy. Many labels are further along in using digital-only formats in Asia.

Phil Hardy, analyst at The View, said while physical recorded music sales are in terminal decline, a new business is emerging for recorded music companies in which the digital and ancillary exploitation of their rights are growing. Many in the music business are hoping that licensing music rights to social media sites like Imeem and Pandora or mobile music services beyond just ringtones will be a major growth area in years ahead.

Hardy: It is unlikely that the value of these rights will ever reach that of recorded music sales at its height, but for a slimmed down record industry the higher margins that the digital, performing rights and the 360 degree artist deal sectors represent could bring a return to profitability.

Global recorded music sales in 2008 (US $)

Physical

Digital

Performance rights

Total

USA

3.14 bln (-31.2%)

1.78 bln(+16.5%)

54.8 mln (+133%)

4.98 bln       (-18.6%)

Europe

5.81 bln (-11.3%)

750.8 mln (+36 %)

576.2 mln (+11.3%)

7.31 bln (-6.3%)

Asia

3.6bln (4.9%)

1.06 bln  (+26%)

108.1 mln (+14.6%)

4.77 bln (+1.0%)

Latin America

430.3 mln (-10.3%)

62.6 mln (+46.6%)

25.7 5 (+16.7%)

18.6 mln (-4.7%)

Global

13.8 bln       (-15.4%)

3.78 bln  (+24.1%)

802.0 (+16.2%)

18.42 bln (-8.3%)

Source: IFPI

Digital sales are growing everywhere but perhaps not quickly enough. According to Hardy, who reviewed the IFPI numbers closely, the percentage of overall sales accounted for by digital sales grew in the Top 10 territories. In the US digital sales grew to 36 percent share in the US from 20 percent. And in Japan digital took 20 percent market share up from 16 percent. In the UK digital rose to 14 percent market share from 8 percent.