The fact that Japan’s digital revenue fell sharply last year says more about the market than the country’s anti-piracy legislation. Its relatively small digital market is heavy on ringtones and mobile downloads, two segments that are in steep decline and are overshadowing growth elsewhere. Internet downloads grew 138% but accounted for 25.8% of digital revenue. Subscriptions grew 132% but accounted for less than 1%.
Japan's overall gain and digital loss were almost exactly those of South Korea, a country that implemented its anti-piracy law in 2009. Total South Korean revenues were up 4.4% last year after gains of 12.3% and 1.8% in 2010 and 2011, respectively. Digital revenues dropped 25% after gains of 10.3% in 2010 and 6.1% in 2011. Those big gains in 2010 that followed the law's implementation have dissipated.
Numerous academic studies have found that piracy is harmful to music sales. One study found an increase in France's iTunes sales due to the public's awareness of its anti-piracy law that was passed in 2009 and implemented in 2010. The law's impact seemed to be evident in last year's numbers. France's digital sales climbed 32.4% in 2011 after rising just 13.9% a year earlier. But the law's impact appears to have died down. Digital sales growth dropped to a still-healthy 12.7% in 2012.
A country can certainly grow revenues without anti-piracy legislation and enforcement. New digital businesses can drive revenue growth. Take Brazil, which has a reputation for copyright infringement but grew by leaps and bounds in 2012. Last year, Brazil's digital revenues grew 81.4% and total revenues up 8.9%. One driver was undoubtedly the iTunes store that launched in Brazil in late 2011. Subscription services Rdio and Deezer also operate in the country. A Muve Music-powered subscription service by mobile carrier TIM launched this year.
The United States has got by without anti-piracy legislation (although ISPs voluntary anti-piracy measures rolled out earlier this year) and has grown digital revenues by embracing and building new revenue streams such as subscription and ad-supported streaming. Digital revenues rose 10.8% in 2012 although total revenues dropped 0.5%. (The annual decline was 0.9% as reported by the RIAA last month. The difference arises because the IFPI reports trade revenues while the RIAA reports estimated retail value) The United States now accounts for 45% of global digital revenue, up from 42% in 2011.