The FINANCIAL — Music stores in Georgia claim that sale statistics have fallen dramatically over the last few years. There is almost no demand any longer for audio albums at stores selling CDs produced by local or foreign companies.
Music store network Audio Video and some other retailers are actually in the process of closing down their businesses. Store managers are blaming the social and economical situation for the music crisis. But continue closing their eyes to the unauthorized distribution of digital music.
Caucasus Online, one of the leading internet providers in Georgia, involved in a long-running conflict with United Telecom Georgia, openly provides free access to thousands of digital music files. The company operates websites offering the free download of music and video. One of them is avoe.ge. According to the same company the domain is registered by Mamia Sanadiradze, head of Caucasus Online. Another website providing access to pirate files is registered by Georgia Online, a company owned by Caucasus Online, the website’s name is bude.ge.
Music companies worldwide are adapting to a new revenue model. They offer consumers online music stores and more choice. But in Georgia companies have not managed to organize the online market sufficiently to fight piracy. There is no single website in Georgia providing authorized music for sale.
According to IFPI statistics 95 percent of music downloads are unauthorised, with no payment to artists and producers. IFPI represents the recording industry worldwide, with a membership comprising some 1,400 record companies in around 70 countries.
In 2008 the digital music business internationally grew by around 25 percent to USD 3.7 billion. Digital platforms now account for around 20 percent of recorded music sales, up from 15 percent in 2007.
“The demand for different singer CDs significantly decreased this year. In my view this is as a result of the current social environment around us. The economic crisis is certainly one of the reasons why CD sales have dropped,” says Nino Gabunia, Consultant Manager of Sharden Music Bar.
“Sales statistics decreased by 60-70%,” says Merab Shakulashvili, Director of Studia Tbilisi.
“CD sales have decreased by about 50%, if we compare the results of 2009 to the results of 2008,” says Maiko Sakhltkhutsishvili, Sales Manager of Oscar.
“People have no time for buying CDs or just have insufficient material resources to buy CDs any longer,” says Gabunia, Sharden Music Bar.
“Most people prefer to just download songs from the internet. In my opinion the internet and our store have different customer niches and I can’t see any problem with that,” she reveals.
“Downloading songs from the internet for free affects our sales and that is why we have suffered quite large material losses,” says Shakulashvili, Studia Tbilisi.
“Not only are stores being harmed materially but the original studio, singer and author too! All of them are facing problems as a result of the currently easy access to pirate copies on the internet. Most Georgian songs are available on the internet for free and in my view they shouldn’t be. It should cost something to access them, like it does abroad,” says Shakulashvili.
The owner of Audio Video says that they are in quite a difficult situation of low demand for CDs and they are actually about to close down this section.
Most of the CD selling companies interviewed by The FINANCIAL have said that Michael Jackson and Georgian folk songs lead in terms of CD sales in Georgia.
“Our store’s location attracts tourists who generally prefer to buy Georgian folk songs. Georgian singers and groups have the highest sales. For example there is high demand for Gia Kancheli’s music and the traditional Georgian group Rustavi’s songs,” says Nino Gabunia.
“After the death of Michael Jackson, the singer became even more popular than before and so there is quite a lot of demand for this singer at our store,” Gabunia told The FINANCIAL.
“Jackson’s CDs are often asked for, but Georgian music is just as in demand. For example Qartuli Khmebi’s music is some of the most popular at our store,” Sakhltkhutsishvili says.
“We offer a variety of CD prices to our customers. If they can’t afford to pay the original price of the CD then we offer them cheaper CDs of lower quality. Generally the prices of our CDs start from GEL 5 to GEL 15,” says Gabunia.
“We import CDs from foreign countries like the US and Ukraine, but we also buy disks from very high quality Georgian studios,” Gabunia says.
Single track downloads, up 24 percent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums are also growing steadily (up 37%). The top selling single of 2008 was Lil Wayne’s Lollipop.
The US is the world leader in digital music sales, accounting for some 50 percent of the global digital music market value. Single track downloads crossed the one billion mark for the first time in 2008, totalling 1.1 billion, up 27 percent on 2007. Digital album sales totalled 66 million, an increase of 32 percent (Nielsen SoundScan).
In Japan, a predominantly mobile music market, digital sales helped overall trade revenues to grow in the first half of 2008. 140 million mobile singles were sold in 2008, an increase of 26 percent from the previous year (RIAJ).
The UK saw the biggest increase in digital sales in the first half of 2008 among the top markets, with sales up by 45 percent. 110 million single tracks were downloaded in 2008, up 42 percent from 2007. Digital album sales also rose sharply, by 65 percent to 10.3 million now accounting for 7.7 percent of the albums market (OCC/BPI).
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