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ECONOMY

German music consumers shun new technologies

The German music industry is expecting a “single-figure” percent drop in turnover for 2008, according to the German Music Industry Association. Experts say that German music consumers are not quite ready for new technologies.

German music consumers shun new technologies
Photo: DPA

Stefan Michalk, spokesman for the association, told the news agency DDP on Friday that despite this small overall drop, branches of the music business such as licensing, concerts and merchandising have prospered this year, though the statistics have not yet been released.

With the wide range of new music technologies now available, and pre-installed music now on new computers and mobile phones, the consumer of the future “will be increasingly particular about what his personal music needs are,” Michalk said. But compared to American and British consumers, Germans are showing a stubborn loyalty to the old-fashioned listening habits.

Despite consistent falls in CD sales, in comparison to other countries Michalk says that Germany still has a “stable business” when it comes to physical sound-storage media. “A lot of people have a mobile phone that can play music, but don’t use this service.”

Michalk warned against introducing technologies to the market before the consumer is ready. “Record companies can’t afford to invest in things that don’t promise success.” Nevertheless he does believe that investing in new ideas is the right way in the long-term.

Despite the Germans’ relative conservatism, the turnover figures for 2008 show a 30 to 40 percent increase in download sales. On top of this, users are more often buying whole albums rather than singles online. In the first nine months of the year, there was a 50 percent growth in the sale of so-called music “bundles”.

Up-to-date statistics on illegal downloading are not yet available, though Michalk criticised the announcement of some state prosecutors that they would only pursue music pirates with more than 3,000 downloads. “That wasn’t particularly helpful,” he said.

Since September, the names of illegal downloaders can be legally released in Germany after only one album has been downloaded.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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