CD sales were down and music listening and digital download purchases were up in 2008, but you won’t find anyone popping bottles of bubbly in celebration of this news, if only because online music sales have yet to replace lost CD revenue.
And there’s more information where that came from – market research company The NPD Group.
According to NPD, the number of Internet users paying for music downloads increased by more than 8 million in 2008 to total 36 million. Purchases of online music increased by 29 percent since 2007 and now account for 33 percent of all music tracks purchased in the U.S. On the downside, there were 17 million fewer CD buyers in 2008 than in 2007.
“Rising incidence of paid downloads is a positive development for the industry, but not all lost CD buyers are turning to digital music,” said NPD entertainment industry analyst Russ Crupnick.
NPD also says the decline in CD buyers cut across all age groups, but was particularly evident in teens and folks over 50. While the drop in CD purchases made by baby-boomers is hardly good news for the music industry, NPD’s contention that CD sales dropped among teens is extra disheartening because people often develop their music purchasing habits while they are teenagers. Simply put – if teens purchased fewer CDs in 2008, it’s a good bet the final report for 2009 will be an even bigger loss.
Along with fewer teens and boomers purchasing CDs comes the news that there were 13 million fewer music buyers in the U.S. last year than in 2007. Think about that – 13 million fewer music buyers. Where did they all go?
Of course, some of them, to put it delicately, kicked the bucket. But The NPD Group didn’t pull that figure out of their collective hats. Could it be that a good chunk of that 13 million switched from buying music to stealing music?
NPD also states the decline in music purchasing was led by a 19 percent drop in CD sales, and that only 58 percent of Netizens reported purchasing CDs or digital downloads in 2008, versus 65 percent in 2007.
According to NPD, consumers blamed the drop in CD purchases on the economy; with most saying they had cut back on all entertainment expenses. Furthermore, some consumers feel CDs are too expensive, and some even say they’re quite happy with their current music collection.
Consumers also echoed remarks from years past in saying they preferred purchasing individual tracks online over buying physical CDs because online buying meant they got only the tracks they wanted, as well as fulfilling their instant gratification desire for new music.
But there were a few bright spots in NPD’s report. While buying music is down, listening to music is up. The research company said awareness and usage of popular Internet radio service Pandora doubled year over year to 18 percent of Internet users, with one-third of the Pandora-aware crowd actually ending up using the service.
NPD also said the percentage of consumers claiming to listen to music on social network sites actually increased from 15 percent in 2007’s fourth quarter to 19 percent in the same period during 2008.
“The trends we’re seeing in our consumer tracking studies are evidence of the continued transformation of the music industry,” said Crupnick. “Just as music piracy and the advent of digital music ended the primacy of the CD, we are beginning to see new forms of listening challenge the practice of paying for music. The music industry now has to redouble efforts to intercept and engage these listeners, so they can create revenue through upselling music, videos, concert tickets and related merchandise.”
For The NPD Group Web site, click here.