Year in Review: CD Sales

I have started to consolidate information from the articles I have been reading this year and while I wont post every topic summary I am preparing I will share with you some of the more interesting (and shorter) ones.

Consumer Trends
NPD reported that there has been a significant change to the purchasing habits among young people.[1] The survey indicates that nearly all teenagers bought no CDs in 2007 with an estimated 1 million people in total no longer purchasing discs. Around 48% of teenagers brought no CDs at all compared with 38% in 2006.[2]

Pew Internet conducted research in the music buying habits of consumers in 2008 and found that 83% of Americans discover new music through terrestrial radio, movies, or television.[3] A total of 64% pointed to tips from friends and family while another 56% pointed to online sources.[4] Indeed 51% of respondents indicated that the internet played no part in their determining what music they purchased, 37% suggested it played a minor role and only 12% said it played a major role.[5] Surprising results were reported with respect to the format of music purchases with 82% or music buyers saying that all or most of their music purchases were in the CD format.[6] For those aged under 36 years however this dropped to 69% of music buyers.[7]

Loss of Sales

Australia
A PricewaterhouseCoopers assessment in 2008 suggested that music sales in Australia will continue to decline over the next five years.[8] Declines in 2007 were calculated to be 10.6% with declines in the first half of 2008 of 6.8% to $AU795million ($US733 million). CD sales dropped nearly 12% in 2007.[9] Year over sales in Australian were reported by Nielsen Soundscan to be down 12%.[10]

United States
During the first half of 2008 music sales in the United States dropped 11% selling 204.6 million units compared with 229.8 million units for the same period in 2007.[11] Vinyl sales increased 77% to 803,000 records from 454,000 the previous year. Overall album sales were down 15%.[12] Year over year album sales in the United States were reported by Nielsen Soundscan to be down 15%.[13]

UK
Year over year album sales in the UK were reported by Nielsen Soundscan to be down 10%.[14]

Canada
In Canada physical sales between 2006 and 2007 dropped 6.9%.[15]

World
Overall music sales were reported by Nielsen Soundscan to be down 6% world wide in 2008.[16] Total retail revenues were $29.922 billion in 2007, a 5.6% drop from 2006.[17] Over the past five years sales have dropped 19.1% from $36.995 billion in 2002.[18] Over ten years the drop in sales has been 22.1% from $38.414 billion in 1997.[19] Revenue for the music industry peaked in 1999 at $40.536 billion.[20] The IFPI indicated that CD sales fell overall by 11% between 2005 and 2006.[21]

Wholesale Price of CDs
Retailers in the United States have been pressuring the recording industry to lower the wholesale cost of CDs and in 2008 it was reported that some new releases were being sold by Wal-Mart for $US5 each with other titles available for under $US10.[22]

Artists Not Releasing CDs
Some artists have also begun to refuse to release CDs with Elvis Costello’s album Momfuku only being sold in digital and vinyl formats.[23]

Strategies
One strategy that was experimented with in 2008 to increase CD sales was to wait until artists became popular and then removing tracks from iTunes. Reports suggest that this strategy did not improve the CD sales of the artists with consumers turning to illegal file sharing and cover versions instead of the original digital tracks.[24]


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[1] SiliconValley.com/Los Angeles Times, More teens ignore CDs in buying their tunes (27 February 2008) <http://www.siliconvalley.com/news/ci_8376237> at 29 February 2008
[2] SiliconValley.com/Los Angeles Times, More teens ignore CDs in buying their tunes (27 February 2008) <http://www.siliconvalley.com/news/ci_8376237> at 29 February 2008; The NPD Group, Consumers Acquire More Music in 2007, But Spend Less (26 February 2008) <http://www.npd.com/press/releases/press_080226a.html> at 27 February 2008
[3] Digital Music News, Pew: Internet Playing Minor Role in Music Buying Decisions (22 May 2008) <http://www.digitalmusicnews.com/stories/052208pew> at 4 June 2008
[4] Digital Music News, Pew: Internet Playing Minor Role in Music Buying Decisions (22 May 2008) <http://www.digitalmusicnews.com/stories/052208pew> at 4 June 2008
[5] Digital Music News, Pew: Internet Playing Minor Role in Music Buying Decisions (22 May 2008) <http://www.digitalmusicnews.com/stories/052208pew> at 4 June 2008
[6] Digital Music News, Pew: Internet Playing Minor Role in Music Buying Decisions (22 May 2008) <http://www.digitalmusicnews.com/stories/052208pew> at 4 June 2008
[7] Digital Music News, Pew: Internet Playing Minor Role in Music Buying Decisions (22 May 2008) <http://www.digitalmusicnews.com/stories/052208pew> at 4 June 2008
[8] Digital Music News, PwC: Australian Recordings Going Down Under (6 August 2008) <http://www.digitalmusicnews.com/stories/080508pwc> at 7 August 2008
[9] Digital Music News, PwC: Australian Recordings Going Down Under (6 August 2008) <http://www.digitalmusicnews.com/stories/080508pwc> at 7 August 2008
[10] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[11] Digital Music News, July Already? Album Sales Keep Sinking In '08... (3 July 2008) <http://www.digitalmusicnews.com/stories/070208album> at 4 July 2008
[12] Digital Music News, July Already? Album Sales Keep Sinking In '08... (3 July 2008) <http://www.digitalmusicnews.com/stories/070208album> at 4 July 2008
[13] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008; see also: RIAA, 2007 End Year Shipment Statistics (April 2008) <http://76.74.24.142/81128FFD-028F-282E-1CE5-FDBF16A46388.pdf> at 30 April 2008; Digital Music News, Albums Keep Dropping; Bottom Remains Murky (11 April 2008) <http://www.digitalmusicnews.com/stories/041008sales> at 13 April 2008; Digital Music News, Album Sales Bath Continues During First Quarter (3 April 2008) <http://www.digitalmusicnews.com/stories/040208quarter> at 8 April 2008; see also: Digital Music News, Sales Bath Continues In January, Double-Digit Declines (5 February 2008) <http://www.digitalmusicnews.com/stories/020408cds> at 19 February 2008
[14] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[15] ZeroPaid, Studies - Music Sales: Canada Up, USA Down (5 January 2008) <http://www.zeropaid.com/news/9173/Studies+-+Music+Sales%3A+Canada+Up%2C+USA+Down> at 8 January 2008
[16] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[17] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[18] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[19] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[20] Digital Music News, Shedding Billions: Latest IFPI Figures Reflect Difficult Decade (21 May 2008) <http://www.digitalmusicnews.com/stories/022108industry> at 4 June 2008
[21] The Age, 95% of music doanloads are illegal (25 January 2008) <http://www.theage.com.au/news/web/95-of-music-downloads-are-illegal/2008/01/24/1201025084723.html> at 31 January 2008
[22] Digital Music News, The Incredibly Discounted CD: Now at Wal-Mart (29 April 2008) <http://www.digitalmusicnews.com/stories/042808walmart> at 30 April 2008
[23] Digital Music News, Costello Disses CD; Goes Vinyl, Digital Exclusively (25 March 2008) <http://www.digitalmusicnews.com/stories/032408costello> at 26 March 2008
[24] TechDirt, Looks Like That Plan To Remove Songs From iTunes Didn't Work Out So (11 September 2008) <http://www.techdirt.com/articles/20080910/2119052228.shtml> at 14 September 2008