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Study: US digital music will overtake CDs in 2012

updated 07:40 am EDT, Wed March 30, 2011

Analysts see digital music past CDs in 2012

Digital music should overtake CDs in the US for the first time next year, Strategy Analytics said in a new study. It expected CDs to continue dropping a steep 40 percent from $3.8 billion in revenue for 2010 to just $2.7 billion in 2012. Digital, led mostly by iTunes, would keep growing and just edge past the physical medium to hit $2.8 billion.

Online music sales weren't growing as quickly as expected by the labels, digital media research head Martin Olausson said, leading to the overall market shrinking from $6.2 billion last year to $5.5 billion in 2012. The analyst firm still saw digital music growing but believed labels would still "struggle" as they faiuled to understand how to latch on to digital.

Apple's iTunes policies meant that direct downloads would still rule by 2015, with singles making up 39 percent of digital music, and 32 percent representing albums. Subscriptions like Rhapsody or the Zune Pass would still be the minority at 14 percent, while an upcoming Spotify US launch and other possible deals would carve out another 14 percent for free, ad-sponsored music. Labels had to consider subscriptions and other unlimited approaches if they hoped to see revenue grow, Strategy Analytics said.

Industry organizations such as the RIAA in the US and the worldwide IFPI have regularly said the drops in music revenue are only due to piracy. However, it's also believed some of the drop is due to the decline of the album format. Much of the industry's peak in the 1990s was credited both to stronger whole albums in some cases as well as the frequent necessity to buy a whole album at $15 to $20, even when only one or two songs were interesting.

By Electronista Staff
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  1. Jonathan-Tanya

    Fresh-Faced Recruit

    Joined: Oct 2004


    strong economy in the 1990's

    look at newspapers, which were neither impacted by poverty or even by digital newspapers, per se.

    They still tanked with the move to the internet.

    Piracy is real, also existed in the 1990's, but other factors beyond buying albums are at play - there was a stonger economy then, and the internet as competitor, was really not so strong.

    My daughter listens to songs on YouTube all the time. If you removed your songs from YouTube - fine, it's like removing them from the radio, if you don't want anyone to hear them, go ahead.

    There are millions of songs, my daughter is going to listen to one that is available.

    So that, is the crux of it. Don't make it available and nobody misses it. Make it available, and people listen for free.

    Piracy may be an issue for back titles, but for new songs, this is the dilemma they will constantly face.

  1. GilbertGaldo

    Fresh-Faced Recruit

    Joined: Jan 2011


    CD's are digital music

    Whether you download music or listen to cds, music today is digital. It should be online downloads versus physical media. Why can't everyone get this right?

  1. Flying Meat

    Dedicated MacNNer

    Joined: Jan 2007


    3.8 billion?!!?

    Honestly. What the heck have they been doing with all that money? Obviously it was even more in the CD hay days.
    Is this the first time I've noticed a value associated with that market, or did they just not make that info generally available.
    Gruesome. No wonder they never really reduced the price of music CDs. Didn't want to stop wallowing in massive amounts of cash, I'll bet.

  1. Athens

    Addicted to MacNN

    Joined: Jan 2003



    Posted this in the wrong Story but oh well

    I go to the store looking for CD's priced at $10.00 or less. I refuse to pay more for music.

    Problem 1) can't find many CD's, at all. The selection is c***
    Problem 2) most of what they do have is priced between 15.00 and 20.00
    Problem 3) the very few that are 10.00 or less I already own or suck badly.

    Music industry is killing itself.

  1. elroth

    Junior Member

    Joined: Jul 2006


    missing something

    I've never seen the RIAA mention the market for used CDs. It's a huge market - just look at Amazon Marketplace sellers or eBay. Used CD sales don't count in the statistics.

    @Athens - there are some pretty cheap prices on new CDs in the Amazon Marketplace, even including shipping costs - a boatload under or around $10. Some sellers import from England, for example, where many older CDs especially are much cheaper. It depends on what music you like.

    I like whole albums and buy a lot of them, but only lossless, except once in a while when the album's not on CD..

  1. ferdchet

    Fresh-Faced Recruit

    Joined: Feb 2011


    Surprising (that it's only happening now!)

    I would have figured that CD sales were lower than digital sales a few years ago. I think elroth must be right - Amazon is propping up the CD part of the music industry. I am still amazed that places like FYE are still around selling CDs - and at full retail! Those stores always look like ghost towns, but someone must be dumb enough to shop there.

    Most CDs seem to have a few good songs and the rest is c***. It's gotten worse with the artists the music industry shoves through their meat grinder the last few years. I love iTunes and Amazon MP3 for that so I can pick what I want, and leave the c***. That's the part that pisses the music industry off the most. They want to charge full price for 80% c***.

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