Copyright Law

NPD Group Study Shows Increase in Online Download Sales

By DrewWilson

When it comes to the ratio between physical album sales and digital download sales, digital download sales have increased at the expense of physical CD sales. That’s not to say that CD sales are falling out of existence, but there seems to be a trend where sales are gradually going online even though most sales are physical CD sales. All this is according to a recently released NPD Group study.

One can’t help but note the interesting timing of this study. It should be noted though, that the study is showing what is happening in the United States. So the connection between Canada and the United States is purely hypothetical from looking at the numbers presented in this particular study (although countless studies have shown Canadian digital sales growth outperforming growth in the United States) but if there is a similar trend happening in Canada, no wonder the primary concerns from Canadians have to do with fair dealings and digital locks. We’re witnessing an industry who is pointing at their paying customers and screaming “illegal pirates!”

The NPD group study also suggests that Apple’s iTunes has a 25% market share in the digital music sales as well.

In fact, many who point to the digital revolution and say that it’s the future may find the comments by a vice president surprising as well.

“Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products,” said Russ Crupnick, vice president of entertainment industry analysis “But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010.”

The trend of moving from physical to digital is particularly evident, even if digital music buyers are still the minority:

CDs comprised 65 percent of all music sold in the first half of 2009 compared to paid digital downloads, which comprised 35 percent of music sales. By comparison, paid digital music downloads comprised just 20 percent of sales in 2007 ? growing to 30 percent of the music market last year.

“The growth of legal digital music downloads, and Apple’s success in holding that market, has increased iTunes’s overall strength in the retail music category,” said Russ Crupnick, entertainment industry analyst for The NPD Group. “But the importance of the big box retailers shouldn’t be dismissed, as long as the majority of music consumers continue to buy CDs.”

Still, if in 2007, digital sales accounts for 20% of all sales, then in 2008, it accounts for 30%, then in 2009, it accounts for 35%, one wonders what the market will look like in, say, 2019. If the percentage goes up by 5% every year from now till then, that means 80% of music sold would be online download sales. Who knows what technology would bring us by then on top of it all provided copyright law doesn’t continue to prohibit innovation as seen in the RealDVD case.

Perhaps one of the concerns that record labels should address is how to market sales online to the public. Clearly physical sales is dominant, but it’s a very real possibility that this market domination of the physical CD won’t last forever if this study is anything to go by.

Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

Full post as published by ZeroPaid on August 19, 2009 (boomark / email).