"The Biggest Problem" The Recording Industry Faces

Billboard and Reuters report that “The global recorded music market fell for the seventh consecutive year in 2006, and the slide is accelerating in 2007”:

Sales fell 5% year-over-year to $19.6 billion, said the International Federation of the Phonographic Industry (IFPI), a London-based group that represents the major record labels.

Against a backdrop of shrinking CD sales and piracy, the value of physical music shipments tumbled 11% to $17.5 billion last year, the IFPI reported in its Recording Industry in Numbers 2007 study. Digital shipments through mobile services and the 500-plus recognized online music services jumped 85% to $2.1 billion.

The results “reflect an industry in transition,” IFPI chairman and CEO John Kennedy said.

“We hoped that the decline in physical sales would be offset by the increase in digital sales, giving us the ‘holy grail.’ But while digital sales have grown as expected, physical sales have fallen by more than expected,” he said.

“Unfortunately, this trend has continued in 2007,” he added. “Physical sales continue to drop at a faster pace than we had hoped for, particularly in the U.S. (down 7.3%) and now also in the U.K. (off 6.7%) — a market that had shown incredible resilience.”

The lion’s share of blame, Kennedy said, should be leveled at piracy, which he described as the biggest problem the industry faces.

Actually, the biggest problem the recording industry faces, much like Detroit in the 1970s, is that its new product by and large–to borrow one of James Lileks’ favorite words–is krrrepp.

Related: “Hollywood’s Big Summer Turns Ho-Hum“, though Transformers could still save the day. But just as last year’s Pirates of the Caribbean sequel salvaged another forgettable year, isn’t betting much of the summer’s success on just one or two pontential mega-blockbusters quite a risky way to do business?

And for the Old Media trifecta: “NBC Chief Tries To Halt The Exodus“.