Up until
recently, sales of digital music downloads have been rapidly increasing ever since
the launch of the first legal music download services such as iTunes. Like the launch of any other decent product, sales usually dramatically increase over a certain period until the market penetration reaches a point where sales level off. Well, this is what now seems to be happening with music download sales.
In the first 16 weeks of 2006, there was more than double the number of music download sales than during the same period last year. However, when it comes to comparing the sales of the second quarter of this year against the first, sales have actually started falling back slightly, leading to potentially bad news for the music industry that relies on these sales to make up for falling CD sales. Since the last quarter of 2004, the average download sales growth has been at least 8% from quarter to quarter.
However, according to a spokeswoman for Nielsen SoundScan, these figures do not take into account fluctuations between seasons, especially since the sales tend to be the highest towards the end December when consumers who have received an iPod or other online-store compatible player as a gift go online to buy music for their new player. Other likely reasons for the slowdown include consumers ripping their music from CDs, borrowing friend's CDs, transferring non-copy protected music between players and downloading music illegally from file sharing services.
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Though the average number of digital downloads sold in the United States more than doubled in the first 16 weeks of 2006 compared with the same time last year, sales thus far in the second quarter are trending down from the previous quarter, according to Diffusion. Recent reports from both Diffusion and Pali Research in New York conclude that the spring trend could portend a slower rate of growth for paid music downloads. That would be bad news for the $12 billion music industry, which has counted on accelerating digital downloads to offset a slide in compact disc sales '“ down 25 percent from a peak of 942 million in 2000. |
Digital Rights Management (DRM) may also be responsible for the slowdown, especially with more consumers becoming aware of the restrictions. When iTunes and other music download services first launched, many consumers would have started buying music not realising about the restrictions in place. Now after a few years, consumers who have been using iTunes for a while will likely have encountered some sort of restrictions, such as taking music from one PC to another after replacing their PC and issues with carrying music about such as listening to it on other PCs, especially students who often go from one computer room to another.
Last year, there was
also a report of a digital music sales slow down, but the slowdown started
happening from around May on until the end of the year when it started backing
up again for the Christmas season. However, with the slowdown happening a
lot earlier this year, it will be interesting to see what happens as the year
progresses. This is already iTunes' third year running, so
anyone seriously interested in using the service would have
likely made use of it already.
Finally, there is only so much music one can buy before they have everything they are interested in. When consumers fill up their MP3 players with freely available music, they will often gather music from CDs, file sharing services, friends, etc. accumulating to several thousand songs. However, if one decides to take the legal route of buying each song, they are much less likely to buy songs they are not really interested in and chances are that after a few hundred songs, the only music they will likely buy afterwards would be the odd new interesting song they hear in the charts, on the radio, etc.
Source: SignOnSanDiego
