Music Downloads Have 'Stalled,' Reports Nielsen
July 2, 2010 at 4:26 AM (PT)
Heading into the 4th Of JULY holiday weekend, it's bad news for the ailing recording industry, as a NIELSEN report says downloads of songs to iPODS, computers and other devices have stalled, growing just 0.3% this year. BUSINESSWEEK.COM also reports that, "Even worse for music companies, an earlier digital moneymaker, ringtones, peaked in 2007 at $714 million and have since fallen 24%, according to the latest data from researcher SNL KAGAN."
"Digital downloads are clearly becoming a mature part of the business," says ERNST & YOUNG Sr. Partner HOWARD BASS. "The question is how quickly the music industry can adopt a new digital strategy."
The days when people were building their digital collections or might hear a song and buy digitally are diminishing.
iTUNES, AMAZON.COM and other digital music stores have seen subscriptions leveling off at about 40 million people, market researcher NPD GROUP reports. "The days when people were building their digital collections or might hear a song and buy digitally are diminishing," said NPD analyst RUSS CRUPNICK.
PRICEWATERHOUSE-COOPERS sees downloads picking up this year, but says it won't be enough to keep the overall music business from shrinking. U.S. sales of all kinds of recorded music is expected to fall to $7 billion in 2012, or a bit more than half their level in 2005, before climbing slowly, according to PWC.
Illegal downloads continue to be a tough issue. "This isn't a mature market, it is a market that's getting pirated," former COLUMBIA MUSIC Chairman STRAUSS ZELNICK told BUSINESSWEEK. ZELNICK adds that "value-minded consumers who might have spent money to download their tunes have gone elsewhere. 'When disposable income is tight,' he says, 'a lot of them would rather spend for things like video games that can't be pirated.'"