April 5, 2006 | By Derek Slater

Digital Distribution Drives Improvement in Recording Industry Profits

As the recording industry's doom and gloom rhetoric continues in the face of ever increasing file sharing, the RIAA's own statistics [PDF] tell a much different story. Wired's Chris Anderson examined the recently published 2005 sales stats and found that "2005 may have been more profitable than 2004." While CD sales continued to decline, online and mobile sales made up the difference.

The obvious lesson: the more the record industry focuses on giving fans what they want and embraces digital distribution, the more its profits will increase. Better services, not futile lawsuits and technological restrictions, provide the best way forward. If it can already halt declines through today's online services, imagine how much more the industry would make if it got serious about competing with free by dropping the DRM and radically expanding the available catalogs. Indeed, there's a veritable pot of gold waiting for the industry if only it would stop turning its back on the vast majority of online downloading and provide fans a way to continue file sharing legally.

Here's hoping the RIAA takes this lesson to heart.

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