NPD on Digtal vs CD Sales

Music from iTunes and other download stores now makes up exactly one third of all music sold in the US, according to NPD Group findings. The jump comes after the number of buyers climbed from 28 million in 2007 to 36 million in 2008 and these new shoppers bought more tracks. By contrast, CD sales have continued to plummet and saw about 17 million Americans stop buying CDs altogether in 2008, resulting in a drop for CD sales of about 19 percent.

However, the researchers noted both that CD sales were not only declining faster than downloads could increase but that music sales as a whole were declining in the US; about 13 million fewer people bought music in any format last year. Where 65 percent of those online bought some kind of music in 2007, 58 percent bought music the year later.

The drops in purchases, and CDs in particular, are attributed to multiple factors that don't necessarily involve purchasing. The NPD Group particularly notes that use of Pandora's recommendation-based Internet radio doubled to make up 18 percent of people last year, while as much as 41 percent of college-age adults and 50 percent of teens listen to at least some of their music on social networks liky MySpace or the iLike app for Facebook.

Cautious spending in the recession also contributed, as did behavior for certain age groups; teens and adults over 50 were both significantly less likely to buy music. The shift is interpreted by NPD as a further signal that labels need to adapt their business models. Although downloads are now one of the largest categories, they themselves are potentially threatened by streams.

"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," said the NPD Group's entertainment analyst Russ Crupnick.

By Electronista Staff