Report: CD Sales Decline Accelerates
March 21, 2007 at 4:01 PM (PT)
THE WALL STREET JOURNAL reports a dramatic acceleration of the seven-year sales decline that has battered the music industry. Compact-disc sales for the first three months of this year plunged 20% from a year earlier, the latest sign of the seismic shift in the way consumers acquire music.
The sharp slide in sales of CDs, which still account for more than 85% of music sold, has far eclipsed the growth in sales of digital downloads, which were supposed to have been the industry's salvation.
The slide stems from the confluence of long-simmering factors that are now feeding off each other, including the demise of specialty music retailers like longtime music mecca TOWER RECORDS. About 800 music stores, including TOWER's 89 locations, closed in 2006 alone.
APPLE's sale of around 100 million iPods shows that music remains a powerful force in the lives of consumers. But because of the Internet, those consumers have more ways to obtain music now than they did a decade ago, when walking into a store and buying it was the only option.
JEFF RABHAN, who manages artists and music producers including JERMAINE DUPRI, KELIS and ELLIOT YAMIN, says CDs have become little more than advertisements for more-lucrative goods like concert tickets and T-shirts. "Sales are so down and so off that, as a manager, I look at a CD as part of the marketing of an artist, more than as an income stream," says RABHAN. "It's the vehicle that drives the tour, the merchandise, building the brand, and that's it. There's no money."
Meanwhile, 1 billion songs a month are traded on illegal file-sharing networks, according to BIG CHAMPAGNE.
Nielsen SoundScan's 2007 At A Glance
Late today (3/21) NIELSEN SOUNDSCAN reported that in 2007 it has tracked more individual music purchases than ever in its history year-to-date. Overall consumer music purchase decisions are up 19% (including all album and indidivual digital-track sales). Consumers have purchased 288 million individual digital tracks vs. 242 million at this time last year, and 99 million albums vs. 119 million at the same time last year.
Overall album purchases, including track-equivalent albums (total number of digital-track purchases divided by 10, in order to provide a like-for-like comparison with traditional album purchases), are down 10% this year, from 131 million in 2006 to 118 million. And as WSJ reported, sales of physical CDs have decreased 20% over last year, from 112 million to 89 million.
CD sales account for 90% of traditional album sales (an album purchased in its entirety, whether physical or digital). Sales of digital albums have increased 100% over last year; digital-album sales account for 10% of traditional album sales. Finally, sales of individual digital tracks have increased 54% over last year.