Music Shipments Continue To Drop

RIAA's Mitch Bainwol

The RIAA reported today that music shipments of all physical formats to retail and other outlets declined by 5.8% in the first half of 2005, while a growing legal digital marketplace helped to offset the overall decline. The lobbying group continues to place the blame on a 6.5% decline in CD shipments from record companies to various distribution channels on “illegal online downloading, rampant unauthorized CD burning and traditional counterfeiting of physical products.” 

On the issue of obtaining music through illegal methods, the RIAA stated in their semi-annual shipment report that, according to analysis by the NPD GROUP, "burned CDs" accounted for 29% of music obtained by listeners in 2004. The NPD study showed that among households with Internet access that are burning CDs, 17% of those are burning more than 10 CDs per month. According to SOUNDSCAN, record store sales of the Top 200 albums (the most frequently illegally burned and downloaded, according to the RIAA), declined from 102.8 million units to 93 million units, when comparing the first half of 2005 versus the first half of 2004. 

.. illegal downloading and burning ... compromise the industryâ??s ability to invest in the new bands of tomorrow

Even as the overall market declined, legal digital sales of singles grew 154% in the first 6 months of 2005, compared to the same period in 2004. In the first half of 2005, 148.7 million digital singles were downloaded, compared to 58.6 million in the first half of 2004; 5.1 million full-length albums were downloaded from legal online music sites in 2005, compared to 1.5 million full-length albums downloaded in the first half of 2004. The total estimated retail value of digital singles and albums sold in the first half of 2005 was $198 million, compared with $73 million for the first half of 2004 (estimate derived using current prices of $0.99 and $9.99, respectively). 

When shipments of all physical products are combined with sales of digital downloads, the total unit count for the first half of the year is 343.9 million, which represents a 2.4% decline (counting both digital and physical singles as 1/12th of an album). The RIAA also trumpeted the success of “DualDisc,” the product which combines music, film and video on a single, two-sided disc. The item shipped more than 7 million units in the first half of 2005, including two consecutive No. 1 albums earlier in the year. 

“Even as we continue to transform ourselves and transition to the digital marketplace, the music community is still suffering enormously from the impact of various forms of music theft.  One of the stories we need to repeatedly tell in the coming months is that illegal downloading and burning continue to compromise the industry’s ability to invest in the new bands of tomorrow,” said RIAA Chairman and CEO MITCH BAINWOL. 

“We are encouraged by the growth of the digital music marketplace,” added BAINWOL. “Music labels are working closely with their technology partners to offer fans an incredible, high-quality experience – from download to subscription to legal peer-to-peer sites. And by handing down the unanimous Grokster decision, the Supreme Court has done its part to help level the playing field for all legitimate players. The debate about right and wrong has been settled.”

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