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The Globe and Mail

Green shoots in music industry give hope to other sectors

The Internet didn't kill music, after all. The market may be half its former size, but global sales rose by a hair in 2012, the first uptick since 1999, according to the International Federation of the Phonographic Industry.

The $16.5-billion (U.S.) recording industry isn't completely out of the woods. And sales growth of 0.3 per cent is hardly robust, even if it is the first positive annual move in a long time. Physical formats such as CDs still account for 58 per cent of the market, and they are still in decline. Any worsening of that trend could easily send the business back into shrinking mode.

Yet longer-term patterns are now emerging. Digital music sales have expanded at about 7 per cent a year since 2008. That rate could be increasing, with 9-per-cent growth last year. An improving global economy helps, but the uptake of subscription services such as Spotify is playing a part too. Subscription revenue already exceeds sales of downloads in Sweden, for example.

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The music industry, one of the first threatened by the Internet, offers some hints for other businesses under similar pressure – everything from magazines to movies and beyond. For one thing, resisting technological change doesn't work. Music labels responded to file-sharer Napster's appearance in 1999 with legal attacks. But other pirate sites emerged, sending sales into a tailspin.

Moreover, clinging to CD sales probably handed a bigger slice of new digital markets to upstarts. Hesitating to cannibalize their old business, music labels eventually signed up with Apple's iTunes store, rival download services and subscription or ad-supported channels like Spotify and Pandora.

The success of these examples has shown that making digital access to music cheap and easy not only boosts sales but also defends against piracy. At least in some markets, file-sharing downloads of music are declining sharply – by an estimated 17 per cent in the United States last year, according to the NPD Group.

Not that the good old days are back. Artists are unhappy with the tiny sums they make from streaming services, and the labels no longer have a stranglehold on the industry. But a return to growth after more than a decade is cause for optimism. Music's death by a thousand clicks didn't quite happen. There's hope – eventually – for other industries facing the digital onslaught, too.

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