Monday, January 5

Music sales boom, but albums fizzle for '08

Americans bought more music in 2008 than ever before, but album sales — the music industry's main source of revenue — dropped for a fourth year.

According to the Nielsen Co.'s year-end figures, music purchases — CD, vinyl, cassette and digital purchases of entire albums (grouped together as total albums), plus digital track downloads, singles and music videos — attained a new high of 1.5 billion, up 10.5% over 2007.

More than 70% of those transactions were digital track downloads, a record total of 1.07 billion that swamped 2007's previous high of 844.2 million by 27%. Last week's track downloads set a record of 47.7 million, and 71 songs exceeded 1 million downloads this year, compared with 41 last year (and just two in 2005). Track downloads outsold albums by a ratio of 2.5 to 1.

Total album sales dropped to 428.4 million, 14% fewer than in 2007, and have fallen 45% since 2000. Even combining album and track sales (by a formula that counts 10 track downloads as one album sale), the 535.4 million total is still down 8.5% from 2007 and more than 30% below 2000's physical album sales of 785.1 million.

Music purchases are "astronomically high," says Rob Sisco, Nielsen's president of music, "but it's a marketplace in transition from physical to digital." He sees promise in the rise of digital purchases of entire albums, which reached a high of 65.8 million in 2008. New albums by big acts bring the market up, he says, but "there hasn't been a steady stream of high-profile releases."

Music sales boom, but albums fizzle for '08 -

Wow, it's starting to happen. Exactly as predicted. The advantages of digital distribution now that music is starting to be sold DRM free are starting to really outshine the disadvantages of piracy.

Generally these advantages of digital music sales are summed up as a growth in the depth and breadth of music. A debate I've posted about here in the past.

Specifically it goes something like this.

1) The market of people whom have access to purchase music as it goes digital grows exponentially... it becomes truly global.

2) Love of music is not innate, people can exist without buying any music at all. They can make it themselves in fact and be just as happy. Music interest like all art is cultivated and cultured. People aren't born loving Rothko or PIcaso, they develop a taste, the same goes for Britney Spears. (Eeee. A shiver just went down my spine.) More access to music, more accessibility... more commons = more cultured tastes = huge growth in people's purchasing habits in the mid and long tail

3) people's individual capacity for music is growing exponentially now that it's not encumbered by the physical limitations of CD's.

To put it bluntly I can't wait for the first terabyte mp3 player. I can't imagine what will fill it, but it would be stupid to say say as Bill Gates once did... "I only ever see a need for the individual to have X amount of memory". While this is paraphrased badly, the point is clear, don't be naive about people's capacity to consume and collect nor the ability of new formats to take advantage of that capacity.

I could see music formats of infinitely higher quality, where not only is each instrument a separate track, but each instrument has multiple channels. Who knows where it'll go but I think it's safe to say the mp3 is the wax record of its day.

In the end the death of the CD will have been the best thing that ever happened to the music industry spurring HUGE growth across the board in every area of music from the head to the tail. US citizens will discover musical interests all over the world and we'll discover the rest of the world hasn't even begun to explore the US market.

The only thing limiting the success of the music industry in 2009 will be as always the major labels themselves.

1) While DRM is on the way out, DRM cannot die fast enough. Expect it to stage failed comeback after failed staged comeback though. Everyone loves the unicorn.

2) New competing storefront alternatives are needed to spur innovation in the marketplace, but are limited by the labels arbitrarily picking winners and losers completely contrary to their innovations and contributions. Expect this to continue to slow what would otherwise be extremely rapid innovation and evolution. I.E. Expect to be stuck with the mp3 for a great number of years to start with.

3) geographical barriers thrown up will slow the exponential growth from new world markets slowing the global trend.

All this of course has nothing to do with piracy, that which the major labels fear. In fact as has proven time and again (most obviously with the video game Spore) it directly pushes the market away from the incumbent creating the demand in the p2p black markets and a more demand for independent and alternative artists. Neither are a bad thing for anyone except the major labels... so as is oft said, f*ck em.

In conclusion. Music sales will grow exponentially in 2009 greatly surpassing even the wildest dreams and expectations despite the major labels complete ineptitude. This growth will happen in all areas but CD sales, though even that may eventually even come back in 2-5 years just as vinyl has. Oh, nostalgia.

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