What's Happening to Digital Album Sales?

[Fresh]

www.billboard.biz/bbbiz/content_display/industry/e3ifa81d8937706f99f402c652e1309d4cc

What's Happening to Digital Album Sales?

Digital album sales aren’t falling off a cliff, but they are experiencing a sustained decline for the first time. A Billboard analysis of Nielsen SoundScan data has found that after seven years of strong growth, digital albums are finally starting to show signs of old age.

In 2010, digital album sales have, for the first time, gone through three consecutive quarters of negative growth. Unit sales were down 5% in the first quarter, down 7% in the second quarter and down 3% in the third quarter. In the fourth quarter of 2009, sales reached 22.9 million units, a 28% increase from the third quarter and the highest quarter on record.

It is natural for sales to slip for a quarter or two. Second quarters tends to be slow– first quarter sales are usually strong – and the release schedule in any given quarter could be a bit lackluster. Digital album sales actually dropped 1% in the second quarter of 2006 after growing 40% and 30% in the previous two quarters. In the following years, the second quarter sales have always been lower than first quarter sales.
Unlike tracks, digital albums are actually up this year -- 12% through October 24. Track sales are down less than 1% this year.



But now digital albums’ growth trajectory is similar to that of tracks. The week ending October 10 was so bad that year-over-year digital album sales actually reached negative territory and fell less than 1%. It was the first such deficit of the year. That week’s total of 1.42 million units was the lowest weekly sales total of 2010 and the lowest since December 2009.

Here are some thoughts on this trend:
-- This drop is not a surprise and not a reason to write off the album format. Digital tracks, albeit aided (if only slightly) by a rise in prices, had already lost momentum at this time last year. Digital albums were destined to fade as well, although with a lag time of a year or two behind tracks. These trends show the download market has become mature. Growth is now harder to come by.

-- The fourth quarter (not reflected in these numbers) should bring at least a temporary turnaround for digital albums. A release schedule weighted to the fourth quarter means more sales at the end of 2010 and early 2011. Fueled by sales of gift cards and new hardware devices, digital sales tend to retain some of their holiday momentum in the early part of the following year.

Already in the fourth quarter there has been a strong digital performance by Kings of Leon’s new album, “Come Around Sundown.” Next week’s chart will have Taylor Swift’s new album, “Speak Now.” Also coming in the fourth quarter are new releases by Kanye West, Keith Urban, Rascal Flatts, My Chemical Romance, Norah Jones, greatest hits collections from Pink and Bon Jovi and unreleased music from Bruce Springsteen. Artists such as Josh Groban, Susan Boyle and Neil Diamond, on the other hand, are likely to have CD-centric fourth-quarter hits.

-- Much of the digital album growth in 2010 came in the first quarter. Unit sales are up about 7.3 million units this year. About 41% of that gain came in the first three months of the year and most in the month of January. Since April, year-over-year gains have been smaller.

-- This trend should put extra pressure on record labels and publishers to speed the arrival of next-generation products and services.

[HolidayGuy]

If digital album sales do not start gaining ground, the album as a format will continue to reach record lows. That is the unfortunate downside to the lack of growth for digital album sales. At what level do album sales have to remain for it to be a viable format?

[Deleted]

Albums are done. The music industry is going in full circle. We are heading back to 8-9 track albums and soon after that albums as we know it arent going to make sense for commercial pop artists

[grandelf]

Oct 28, 2010 14:23:22 GMT -5 @jazzysoul47 said:

Albums are done. The music industry is going in full circle. We are heading back to 8-9 track albums and soon after that albums as we know it arent going to make sense for commercial pop artists

Agreed.

And labels are lucky that digital albums are selling what they are. Most people don't have the time/need to check out every song by the artist and just because they like a single, it doesn't mean they will like 10-12 songs by the same artist.

[HolidayGuy]

The thing is that outlets like iTunes probably has had the most negative impact on the album format. It's one thing for singles to be released, but when every track on an album is available to purchase individually (in most cases) , then it's only natural that album sales took the course they did.

[Deleted]

There is no way of getting around it. The music industry killed off albums by forcing people to buy $18 albums in the mid to late 90s by not releasing singles for major hits. Then Napster and other file sharing services popped up as a response allowing people to download single tracks for free. The industry responded by allowing people to download single tracks for cheap on iTunes and other stores. If they start not allowing people to cherry pick hits on stores like iTunes theyre going to be right back to where they were in 1999-2000 with people moving toward illegal filesharing in droves again. Illegal file sharing is not going away. People illegally swapped music in the 80s and 90s on cassette tapes. The internet only made illegal music swapping easier because you can get music from anybody anywhere. The industry needs to embrace the single format and find other ways to make a profit because albums are not going to be it

[starr]

Digital Album:

Taylor Swift's "Speak Now"

iTunes: $13.99
Amazon MP3: $3.99

Digital albums should not cost as much as a physical CD. Record labels have to lower the price.

[Deleted]

Different thing with cassettes

If you record a CD file onto another CD you basically get the same file

If you record a tape onto a tape, the quality suffers a lot

[HolidayGuy]

In a lot of cases, digital albums on iTunes do cost less than their CD counterparts. So, I'm surprised that Swift's album is selling for $13.99 there.

[Janhova's Witness]

Stans are buying individual songs to get their fav's "X records sold" number up.

[Deleted]

My point is, that is why it is not really an issue, you lose a ton of quality copying a cassette, you lose zero quality copying a CD

Massive sharing though did not exist back then either

[Deleted]

File sharing is a new phenomenon(within the last decade), not a decades old one

The internet made this possible, not the recordable cassette

Recording a vinyl album on cassette or a cassette to another cassette does not give you nearly the same product in return. Most people who did this, know that.

It was clearly not a substitute for buying the real thing. Which is why people were not concerned then.

Whereas file sharing could be a substitute for buying the real thing. There is the point you are missing

The end

Thanks for coming

[pnobelysk]

Oct 28, 2010 15:26:18 GMT -5 starr said:

Digital Album:

Taylor Swift's "Speak Now"

iTunes: $13.99
Amazon MP3: $3.99

Digital albums should not cost as much as a physical CD. Record labels have to lower the price.

dont forget a lot of her digital fans already bought 4 or 5 songs from the album so for a lot of them the price is closer two 9 dollars

[freeman]

I kinda don't really like the whole album system. I would prefer if an artist were to release short 8-9 song albums or singles more frequently... Rather than waiting 2 years or more for new albums...

[Deleted]

If I am not getting the point, what is the point?

Vinyl to cassette copying and cassette to cassette copying definitely existed. But did it have an impact on music sales? NO.

Sales were growing during the 80s and 90s not shrinking.

So how can you say that this even matters at all, when it clearly had no impact on music sales?

People recorded programs off of TV too but that also did not impact anything.


I don't know if you have tried this before or not but if you had you would know that there is a world of difference between what you get from home copying onto a tape and what you can buy in a store. This would be why it had zero impact on sales.

The only time this started to matter was when the "file sharing" phenomenon was escalated by Napster.

When you copy an electronic file from one place to another you still get the same electronic file without a loss of quality. This would clearly impact sales. The cassette tape obviously did not

[Deleted]

What impact did vinyl to cassette copying or cassette to cassette copying have on music sales?

[Deleted]

Oct 28, 2010 19:44:58 GMT -5 @jazzysoul47 said:

I dont know. You should tell us since youve got all the answers. I am shaking my head so much right now I think I caught a whiplash

I am trying to understand your point, not argue with it, so you can calm down anytime.

If vinyl to cassette copying and cassette to cassette copying had no impact on music sales in the 80s and 90s.


(Obvious since the industry was growing then)


What is your point?

Why is cassette copying relevant to anything relating to this thread?

[Deleted]

The point is not about the quality of copies people were able to make. The point is that people have always had that DESIRE to acquire music for cheap. It may not be the EXACT same situation but things dont have to be EXACT to have a very similar drive behind them. People have always desired to get music cheap. Sometimes people are willing to get a lesser quality for a little cheaper. That applies to anything. You might go get something store brand because its cheaper and serves a purpose very close to what youre looking for. The internet is not going away and peoples desire to get music cheap is not going to go away. So if the music industry wants to overcharge people and be greedy people are just going to be driven to these blogs and downloading sites to get their music

[SPRΞΞ]

no, the real point is that i would rather spend $1.29 on a song i like, or another $1.29 on the next song i like VS. spending triple or quaduple that on the album. I, as a consumer, just want what sounds good. If i'm not a super stan of the person, i'm just buying the singles.

[Deleted]

Oct 28, 2010 22:11:07 GMT -5 SPRΞΞ said:

no, the real point is that i would rather spend $1.29 on a song i like, or another $1.29 on the next song i like VS. spending triple or quaduple that on the album. I, as a consumer, just want what sounds good. If i'm not a super stan of the person, i'm just buying the singles.

You must have only followed the end of the discussion. The original point is what would you do if iTunes stopped letting you buy individual songs and forced you to buy the whole album?

[SPRΞΞ]

that won't happen, but if it did, i'd go the illegal way most likely. I can't afford it.

[Deleted]

Oct 28, 2010 23:20:18 GMT -5 SPRΞΞ said:

that won't happen, but if it did, i'd go the illegal way most likely. I can't afford it.

and that was my point

[Adonis the DemiGod!]

Oct 28, 2010 14:57:39 GMT -5 HolidayGuy said:

The thing is that outlets like iTunes probably has had the most negative impact on the album format. It's one thing for singles to be released, but when every track on an album is available to purchase individually (in most cases) , then it's only natural that album sales took the course they did.

Actually Napster did that. Itunes was a last effort to sell people the amount of product they wanted and nothing more. If someone isn't in the market for an album and the album is album only then they simply won't buy the album. You aren't going to force someone into buying an album buy cutting off the album tracks. They'll just download the tracks for free and keep it movin'.

People need to face the fact that we are back to a singles market again. I've been saying that since downloads were added into the billboard charts and since downloads were legally available for purchase...and that a singles market was the only way the record companies could stay afloat.

[HolidayGuy]

^Yes, but album sales REALLY started declining once iTunes took off. Sales started declining before 2004/2005, but the percentage declines picked up big time once sales of digital tracks really took off.

Witness these percentage declines of album shipments (which also includes download album sales). Digital track sales swelled in 2006 and continued to do so thereafter.

2004-2005: 7.5%, to 722.5 million
2005-2006: 16%, to 649 million
2006-2007: 14.5%, to 555 million
2007-2008: 18.8%, to 451 million (or 22%, to 432 million; RIAA had a lower figure shown as the last-year total in the year-end 2009 report)

And, 2008-2009 was yet another 15%+ year-to-year drop. So, clearly, the ability to purchase individual tracks has had a huge impact on album sales/shipments.

[Adonis the DemiGod!]

Oct 29, 2010 9:51:23 GMT -5 HolidayGuy said:

^Yes, but album sales REALLY started declining once iTunes took off. Sales started declining before 2004/2005, but the percentage declines picked up big time once sales of digital tracks really took off.

Witness these percentage declines of album shipments (which also includes download album sales). Digital track sales swelled in 2006 and continued to do so thereafter.

2004-2005: 7.5%, to 722.5 million
2005-2006: 16%, to 649 million
2006-2007: 14.5%, to 555 million
2007-2008: 18.8%, to 451 million (or 22%, to 432 million; RIAA had a lower figure shown as the last-year total in the year-end 2009 report)

And, 2008-2009 was yet another 15%+ year-to-year drop. So, clearly, the ability to purchase individual tracks has had a huge impact on album sales/shipments.

Yeah but the record company could cut off the track sales and you'd have the same continued declines in album sales and rampant illegal downloading. The reason they started selling tracks individually in the first place is because the medium to listen to music changed and illegal downloading became the popular thing to do. Every song that I like I download illegally and legally. The ability to buy one or all tracks on an album has nothing to do with illegal downloads. Record company's releasing single tracks was so they could get people to purchase the songs they liked since people were shying away from the albums in general in favor of illegal downloads of the one song they did like on that album and the record companies killed the cd single.

[HolidayGuy]

^I agree, but by doing so, record labels most likely helped album sales suffer even larger declines than they may have had they not made album tracks available for standalone purchase.

Who knows, maybe it will be a full circle thing, where singles take over for a time (as it was in the late 50s/early 60s) and then albums become significant in some form or another at some point. At least that's what would be ideal.

[Adonis the DemiGod!]

Oct 30, 2010 9:27:37 GMT -5 HolidayGuy said:

^I agree, but by doing so, record labels most likely helped album sales suffer even larger declines than they may have had they not made album tracks available for standalone purchase.

Who knows, maybe it will be a full circle thing, where singles take over for a time (as it was in the late 50s/early 60s) and then albums become significant in some form or another at some point. At least that's what would be ideal.

The problem is the record companies had no choice. It's either make individual tracks available or risk not selling a person anything since at 10 bucks a pop it's worth it for the person to simply download the song for free and keep it movin'. When the song is $2.00 or less people are willing to buy the songs since it's easier to find and no risk of being sued at any point in the future. Plus it's the high quality version. It's a win win for the consumer.

[badrobot]

I think we are already moving to a point where musicians aren't so much releasing albums as they are setting up "eras." Most major albums seem to get re-releases with new songs these days. Frequently big-time artists are releasing 6-8 song EPs instead of 12-song albums.

I don't think there's any surprise here. There's no point in trying to somehow turn around the direction things have been going in. The market dictates things now, plain and simple. If a record company wants to make money, they shouldn't be asking "how do we sell more albums," they should be asking, "what do customers want to buy, and how do I deliver more of that and make it profitable."

[Diego]

It's only natural that digital albums are losing steam as the album buying market in general continues to go to hell. Even digital singles seem to be stalling

[fullhousefan]

The fact is, people are gonna have to get used to albums selling less. i also think if the music was better quality today, it would sell more ...