Newsflash to the RIAA: You CAN make money on music downloads!

TWICE: Music Sales Down, Digital Music Sales Up

London - Worldwide sales of downloaded music, including cellphone ringtones, rose 82 percent to about $2 billion in 2006 to account for around 10 percent of music industry sales, up from 5.5 percent, a global music industry trade group announced.
Sales were about evenly split between downloads to a PC and over-the-air downloads of ringtones and full music tracks to a cellphone.
Despite digital-music gains, worldwide music industry sales nonetheless fell, according to the International Federation of the Phonographic Industry (IFPI). Worldwide music industry sales slid to about $20 billion in 2006 from $21 billion in 2005, IFPI statistics show.

Everybody but the RIAA seems to realize that the writing is on the wall. Of especial interest are these factoids:

In other key findings, IFPI said that in the United States:

• 
  more than 13,000 digital-only albums were released in the first half of 2006, accounting for almost 36 percent of all new albums released during that time;
• 
  digital singles have completely replaced physical singles in the United States; and
• 
  music-download subscription services are growing in popularity but account only for a small share of digital music sales because the services are incompatible with Apple’s iPods.

I don't think that you need to be a brilliant strategist (I consider myself merely a "clever" strategist) to understand that going forward, the music industry's success will be predicated upon a two-step strategy:

1. Manufacture less hardcopy product.
2. Focus on getting downloadable product in the hands of customers quickly, easily, and with a perception of value.

Just a thought...

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