Back in January, we reported about the record companies generating revenues of around US$1.1 billion in digital download sales throughout 2005. However, according to the IFPI, overall music sales declined a further 3% in 2005, with the overall sales of CDs falling 6.7%. Besides piracy, other culprits for the decline include competition from other entertainment sources as well as a change in the way consumers get their music according to the IFPI. In just the 4 years between 2001 and 2005, CD sales fell by 19%.
Unlike physical album CD sales, music download services offer the ability to purchase individual songs from an album, which means the consumer does not have to pay for songs they are not interested in. As a result, the sales of individual downloadable songs accounted for 86% of digital download sales. Also, even though album CD sales still account for the majority of album sales, digital download single sales now accounts for three quarters of all singles sales.
The countries with the strongest digital download sales include US, Japan, Britain, Germany and France. However, Japan seems to be the only country where digital music download sales made up for the decline in physical music sales. According to a study of 1,000 adults by the research company Ipsos, 75% said that CDs are overpriced and interestingly 80% consider it stealing to obtain music for free without getting permission from the copyright holder.
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The International Federation of the Phonographic Industry (IFPI), said that revenues from digital sales almost tripled from US$400m in 2004 while the total number of digital single tracks downloaded online or to cellphones rose to 470 million units, up from 160 million. However, overall music sales continued their decline of recent years, dropping another 3% in 2005, largely due to a 6.7% drop in the value of compact disc purchases. |
The ability to buy individual songs from albums is likely one good explanation to why digital music sales don't make up for the decline in physical shipments. For example, if a consumer wanted to get three songs on a particular album, they would have to buy the CD if this was the only way they could get the songs, however with a music download store, why pay a hefty price for a full album when the three songs can be purchased individually? On the other hand, this may be a good thing in that artists are less likely to quickly create 'filler' songs for an album if it means that consumers would sooner buy the main tracks instead, whereas with a CD release, this consumer had to buy the full album.
Source: Fin24 - Business
