Music Industry in Decline

A couple of really interesting stories to come out of America recently regarding the state of the music industry.
First up was the report that in the US, CD sales dropped by 20% in the last year. That’s an awful lot. In real money, it’s a decline from 112 million CDs to 89 millions.
A couple of things to note about this headline – being widely touted. First of all it’s for the first couple of months or so of this year compared to last that are being measured. That’s important because obviously if big-selling albums appeared in February 2006 but not this February, then the comparison’s not really valid. I’d prefer to see stats that compare rolling 12 month periods.
What is clear from the Nielsen information is that more “Music Purchase Decisions” are being made in America than before, with 288 million individual digital tracks being purchased this year compared with 242 million at the same time last year.
What it means is that people are buying more frequently, but they’re buying tracks and not albums. This is a theme picked up upon in a piece in the New York Times.
Now this is the situation in the US, and while it might be indicative of what is, or will be happening in the UK, I think it’s fair to assume that we won’t be far behind.
The UK market is struggling, and I think the music industry itself must take some of the blame. In the high street, top forty fare has undoubtedly dropped in price over the past year, with price points as low as £6.73 for new albums in Tesco, and the same albums being sold for under ten pounds in HMV and Virgin Megastores.
I don’t have the figures to back this assertion up (I’m not giving the BPI fifty quid for a year old handbook to find out), but undoubtedly a much greater proportion of music is sold through supermarkets, and they’re obviously being supplied on very good terms to be able to offer such deep discounting.
It’s only fair, then, that the high street retailers fight back against both them and the online world where consumers can either buy digitally or from retailers like Amazon, Play or CD Wow.
So that cuts margins on the big-sellers.
But then the problem is that anything outside the most popular albums retail at more standard £14.99 and upwards which suddenly makes them appear expensive.
But the big change is that people are buying tracks and not albums.
Of course, I always think it’s a mistake to consider music sales in isolation. The chances are that the money you’re spending on music could equally be spent on a DVD, a computer game, a book or a few drinks in the pub. They’re all “leisure activities” and we only have a finite amount of time and money to spend on them. Growth in one tends to mean a decline in another.
It’s worth noting that my local HMV has handed over more space to DVDs at the cost of CD shelf space. And in the Oxford Street flagship branch, DVDs squeezed computer games from the first floor down to the ground floor – again costing pop/rock music shelf space.
Personally, I still prefer an album to a single, but then I’m in a shrinking minority in preferring most of my music to be at least purchased on some kind of physical medium, even if I’m likely to listen to it on an mp3 player.


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