Study: Music industry on the mend, CD buyers increase

Sales of music CDs have fallen precipitously over the past decade. Pushed to the brink by online file-sharing, piracy and, one may argue, a matching drop-off in quality artists, even customers who wanted to continue buying CDs found their efforts thwarted: record stores around the U.S. closed as their cash registers dried up.

The NPD Group claims the tide is turning, with growth reported within both physical and digital sectors last year.

According to NPD, the number of consumers buying CDs topped 78 million last year, marking a two percent increase over 2010 and the second consecutive year of growth. The group’s “Annual Music Study” revealed that while overall CD sales had actually slipped slightly, a 4 percent boost in legal music downloads last year more than compensated.

“CDs are the gift that keep giving, which proves that even in an increasingly digital age, consumers will respond to quality content and strong perceived value, even if it comes in a physical package,” said Russ Crupnick, senior vice president of industry analysis at NPD.

Crupnick noted CDs were most popular among older listeners who haven’t adapted to digital downloading and “super fans” who aren’t content with looking at track lists on a computer.

Tech savvy consumers have also increased in number, thanks in part to a smartphone explosion. The NPD found that digital music buyers jumped 14 percent to 45 million, leading to a similar spending boost at online music shops. Customers dropped an average of $49 on single and full-album downloads.

Arguably the most important finding of the study is that illegal downloading has consistently dropped, from 19 percent in 2006 to 13 percent in 2011. Crupnick chalked up the slow-but-steady five-year decline to industry lawsuits, P2P site closures and convenient legal alternatives sprouting up. Apple’s iTunes service has sold more than 10 billion tracks alone.

Both Grokster and Limewire, two popular options for free music, were forced to close in the past few years following aggressive lawsuits brought by the recording industry. This year, MegaUpload and BTJunkie have been wiped off the Internet map, the latter shutting down of its own accord. MegaUpload founder Kim Dotcom was arrested in New Zealand for running the site U.S. copyright holders have labeled part of a “mega conspiracy.” Dotcom is currently fighting extradition.