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RIAA crying wolf all the way to the bank 4/6/2006 2:48:28 PM, by Eric BangemanEver since the rise of Napster in the late 1990s, the recording industry has pointed to piracy as a dire threat to its business model. After years of legal actions and generally irritating their customers, the labels finally figured out how to adapt their business model to respond to changing consumer expectations. Enter the digital music download and subscription services. Despite the success of the download model, the RIAA has continued to complain about decreasing CD sales and shrinking profits. It is true that consumers are buying fewer CDs. At the same time, digital sales have soared. Including sales of ringtones and revenues from subscription services, digital media now accounts for nearly 9 percent of recording industry revenues and a startling 42.6 percent of total unit shipments. Looking at the numbers over the past few years, two things stand out. One is the overall decline in sales of physical media (e.g., CDs, CD singles, vinyl, music videos, and DVDs), from 860 million units in 2002 to 749 million last year—almost 13 percent. More importantly, legal downloads have gone from zero to 554 million in two years. Perhaps most telling is that despite a decline of 151 million units of physical media sold since 2002, revenues have only dropped by US$340 million—about 2.7 percent