Study: CD sales decline, digital downloads on the rise

According to the annual Digital Music Study, issued by the NPD Group, the number of Internet users in the US paying for digital music increased by just over 8 million in 2008 to a total of 36 million. Purchases of online digital music downloads increased by 29 percent in 2008 and they now account for 33 percent of all music tracks purchased.

The bad news for the music industry is that the study also revealed that there were nearly 17 million fewer CD buyers in 2008 compared to 2007, and that there were 13 million fewer music buyers in total in the United States. The decline in music purchasing was led by a 19 percent drop in CD sales. Only 58 percent of Internet users reported purchasing CDs or digital music downloads last year, versus 65 percent in 2007.

The recession is one of the reasons why sales declined, but new services that change listening behaviour also contribute to a decline in sales. The use of internet radio services such as Pandora and listening music embedded in social network sites such as MySpace for instance are on the rise.

Russ Crupnick, entertainment industry analyst for The NPD Group, said the following about the results:

 “The trends we’re seeing in our consumer tracking studies are evidence of the continued transformation of the music industry. 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.”

Source: the NPD Group