Market for digital downloads not getting bigger anymore in US

It seems that the market for digital downloads is saturating in the US. The Financial Times reports that growth for this sector has flatlined. In Europe, most markets are still growing, but growth is slowing. According to research by Nielsen, Americans downloaded 630 million tracks in the first half of 2010. That is the exact same figure as the first half of the previous year. The sudden lack of growth is substantial: in 2009, growth was 13% and the year before, 28%.

Europe’s three largest markets the UK, France and Germany are still growing by 7%, 13% and 19% respectively. However, growth is slowing down here as well. According to Jean Littolff, head of Nielsen Music, it is likely that Europe will follow the American example. “As Europe looks to the US generally for music trends, this is a significant point.” For now, streaming services like Spotify remain a niche phenomenon, with less than 6% of people using them.

In piracy-friendly Spain, legal downloads were down 5%.

Littolff explains the US figures by noting that consumer spending is still in a tight spot: “Music is a nice-to-have rather than a necessity. Once people have their iPod filled up with songs, they’re not going to start buying lots and lots more.” Furthermore, he speculates that by now, people have migrated their music collection from CDs to digital files and have completely restocked. So any growth in the market would have to be supported by a growth in the sales of new releases.