A new report summarized in Mi2N shows that purchases of online digital music downloads increased by 29 percent since last year and now account for 33 percent of all music tracks purchased in the U.S. At the same time, according to The NPD Group, the leader in market research for the entertainment industry, the number of Internet users paying for digital music increased by just over 8 million in 2008 to 36 million Internet users.
Download Purchases Up, CD Sales Down
Unfortunately for the music industry, those increases come at the same time as a huge decrease in cd sales — NPD’s Digital Music Study, an annual tracking study covering the music industry, also revealed that there were nearly 17 million fewer CD buyers in 2008 compared to the prior year. “Rising incidence of paid downloads is a positive development for the industry, but not all lost CD buyers are turning to digital music,” said Russ Crupnick, entertainment industry analyst for The NPD Group.
Consumers’ reasons for purchasing less cds were primarily recession based – they were either just spending less on entertainment, or they said the price of cds was causing them to buy less.
Listening to Music Online is up
The report did find that listening to online music streams is increasing – specifically, awareness and usage of Pandora, a leading online radio station, doubled year over year to 18 percent of Internet users. The percentage of consumers claiming to listen to music on social networks – presumably sources like MySpace Music and Last.fm – climbed from 15 percent in the fourth quarter (Q4) of 2007 to 19 percent in Q4 2008.
Nearly half of U.S. teens are engaging with music on social networks, which is an increase from 37 percent a year ago; among college- age Internet users, the percentage increased from 30 percent in 2007 to 41 percent in 2008. In summary, the report notes that the music industry now has to redouble efforts to intercept and engage these listeners, so they can create revenue through upselling music, videos, concert tickets, and related merchandise.