Until recently, the main contributor to falling CD sales according to the RIAA is piracy, which includes illegal file sharing. However, even though they are trying to encourage consumers to use legal services using its non-stop lawsuit campaign, this is actually going to have a devastating effect on CD sales, since once it comes to a time where most consumers buy music as a downloads, why purchase it again on CD?
Throughout 2005, 350 million songs were purchased as downloads; a 150% hike over 2004. Digital album sales also went up 194% over the same period. While 2005 seen music sales hit over 1 billion units for the first time, CD sales are falling; which is bad news for independent record stores that rely on physical CD sales. Besides the hike in digital download sales, there are several other factors involved also: The misuse of DRM anti-piracy measures on CDs only helps discourage consumers from buying CDs, due to iPod and CD player compatibility issues, not to mention installing unwanted software just to play the disc on a PC. Big retail stores including Best Buy and Wal-Mart can afford to sell CDs below cost as this brings consumers in their stores, but as independent record stores cannot do this, this drives away potential customers. With a wider range of radio stations becoming available over satellite as well as by streaming web radio, consumers are listening to more broadcasted music than ever before, thus reducing their dependency on their own collection. Finally, there are various other forms of entertainment including TV, movies and games which competes with music.
Back in January, we reported about half the number of small independent record stores closing their doors over the past 10 years. Now, Musicland which runs 7 retail CD stores across Colorado and 340 stores the nation has filed for bankruptcy. West Coast indie legends has also closed down and in Denver, Cheapo Discs closed off its two retail music shops. Some other retail stores aim to struggle on, despite the falling number of customers. One such store includes Capitol Hill music which is working on ways to bring in customers, such as selling iPods as these help bring in some sales. Loyalty schemes such as buy xx CDs and get one free also helps some stores out as this encourages customers to pick out some extra titles just to get a free disc and word about this gets passed on. Thanks to heystoopid for letting us know about the following news:
|
Musicland, the parent company of several music retailing chains, has filed for bankruptcy. Its MediaPlay stores were shuttered last month. Earlier this week, its Sam Goody chain announced the closure of seven CD stores across Colorado and more than 340 similar stores across the nation. West Coast indie legends such as Rhino Records and Aron’s recently have shut down. In Denver, Cheapo Discs has closed two stores. Ironically, all this bad news follows reports that music sales in 2005 topped a billion units for the first time. But that figure counts every downloaded song with the same weight as a physical CD sale. So despite the record number of units, music industry revenues and CD sales are down. But digital downloading of music off the Internet is exploding. In 2005, more than 350 million songs were downloaded, a 150 percent jump over 2004. Digital album sales soared by 194 percent. Put simply: These are brutal days for many traditional music retailers. The full, in-depth |
As digital music stores is still in its infancy yet at just over 2 years since the iTunes launch, it is like looking at the sales of vinyl records two years after the launch of the Audio CD. With mobile phones and wireless Internet access methods rapidly improving year after year, in a couple of years it may come to the point where the average user can pull out their portable player, select or key in a song title they want to listen to and it either streams live or is downloaded from the music provider.
While some high end mobile phones support wireless music purchasing and downloading, at the moment the phones and music pricing is still too high to make it compete with digital download services using a PC, however this potentially change in the coming years. On the other hand, as ringtone prices often cost several times the cost of a digital download and these sell very well, chances are that digital music sales to mobiles will really take off as more compatible handsets enter the market even if the track pricing remains the same.
heystoopid added: This information, ties in with the nielsen sales figures of audio cd’s falling from 652 million units in ‘04 to circa 602 million units in ‘05, whilst paid downloads for tracks climbed to approximately 350 million or so (it seems that record companies view one paid mp3 download track as one paid for cd (truly says something about the quality of product these days or lack there off)). I recall the Itunes breakdown, means the record companies receive a minimum of 79 cents, whereas the profits from the sale of telephone ring tones is far greater. Oh well, if the average punter is, not going to the picture theatre, to view the latest in hollywood’s overpriced movie that purports to be a blockbuster, must be spending the hard earned cash on other alternatives like dvd’s and on other venues, like live performances. Sigh, this year of 2006 , looks like we will be truly getting the full force the propaganda that piracy is killing both the music and the movie , and that all forms of p2p are truly evil, and should be outlawed and made illegal, never mind the legitimate users! Further, undoubtedly, both industries (movie/music) will be pushing to create some form of daily tax, fee or surcharge, to be applied to all internet users as a form of compensation to maintain their fat cat status! Time will tell all!
Feel free to discuss about online music services on our Music Download, Peer to Peer (P2P) & Legal Issues.
Source: Rocky Mountain News – Music
6 Comments
IRiver > IPod IPod? no thanks. [edited by ChocoCat on 09.02.2006 06:37]
[edited by ChocoCat on 09.02.2006 06:38]
[edited by ChocoCat on 09.02.2006 06:39]
Most popular headlines
Grandmother is falsely accused of file-sharing (11)
- Wed 3 Feb 03:00 by JaredNewman
- Piracy
A woman falsely accused of downloading copyrighted movies might've lost her Internet connection had she not taken her case to the media.
PS3 closing ground on Xbox 360 (1)
- Sat 6 Feb 14:00 by Randomus
- Game Consoles
After years of trailing the Nintendo Wii and Microsoft Xbox 360 on the sales charts, the Sony PlayStation 3 continues to close the gap on the Xbox 360.
Blame Blu-ray for lack of PS3 game downloads (13)
- Thu 4 Feb 09:00 by JaredNewman
- Game Consoles
Don't expect Sony to offer its full game catalog for download over the Playstation 3 any time soon.
Murdoch: Avatar DVD won't be 3D (17)
- Thu 4 Feb 00:00 by Randomus
- Blu-Ray writers & players, LCD TV
News Corp. CEO Robert Murdoch confirmed the DVD release of Avatar won't have 3D support, with no word on a possible 3D Blu-ray version.
