Friday, August 6, 2010

Digital song sales weaken for first time

In a world of record store closures and album sales slowdowns, digital downloads have come to be seen as the one bright beacon in an otherwise troubled music industry.
The download demand may be starting to dim, though, according to data released by Billboard magazine and Nielsen SoundScan, which tracks music sales.

Digital track sales stalled during the first six months of 2010, industry data show. Midway through the year, track sales have declined, by 0.2 percentage points, for the first time since they were tallied — to 597.4 million downloads of songs for the six-month period, according to Nielsen SoundScan.

Last year, those single song downloads were up about 8 percent over the previous 12 months, but that paled in comparison to prior years of explosive growth. In 2008, for instance, the annual digital track growth rate was 26.7 percent. In 2007, it was 45.1 percent. In 2006, it was up 65 percent over 2005.

"It's certainly not a pretty picture," said Mike Dungan, president and CEO of Capitol Records Nashville. "The really disturbing part of this to me is the flattening out of individual digital track sales. That to me looked like the way of the future, even though it's not a business model we all embrace wholeheartedly."

The digital hiccup comes in the midst of a continued freefall in the sale of albums and CDs. In fact, total album sales (physical and digital combined) are down 11 percent this year, even though digital albums were up somewhat at midyear. But digital albums make up a relatively small part of the total and don't move the sales needle much.

The latest data come after the worst decade for U.S. music sales in history, as consumers' music listening and buying habits shift.

With the introduction of iTunes in 2001, digital track sales grew dramatically, upsetting the old world order of album sales in stores. Total album sales were sliced by half, with U.S. music sales revenue plunging more than 40 percent in a decade, according to the Recording Industry Association of America.

(2 of 2)

Real Estate Outlook: After the CreditsMusic’s foreign royalties bring welcome windfall