Music Sales: Downloads Up, CDs Down

Surprise surprise: new market figures from the NPD Group find U.S. consumers are downloading more music and buying fewer CDs.

New market figures from the NPD Group find that U.S. consumers are downloading more music and buying fewer CDs…but that download sales aren’t enough to offset the slump, resulting in a 2 percent decline in music sales during the third quarter of 2008.

“The continued growth in the customer base for paid digital downloads is positive, particularly for teens, but it’s counteracted by deepening softness in CD trends,” said NPD entertainment industry analyst Russ Crupnick, in a statement. “Alternative distribution deals in mobile and social networking are important ways for the music industry to fill the gap left by the decline in traditional revenue streams.”

According to NPD, some 22 percent of U.S. Internet users after 13 and over bought a CD during the third quarter of 2008, but that was down from 25 percent for the same period in 2007, and the firm estimates the overall number of CDs sold during the third quarter of 2008 was 19 percent lower than for the same quarter of 2007. While adults over age 35 bought only ten percent fewer CDs, adults aged 26 to 35 bought 36 percent fewer CDs, and teens bought 34 percent fewer CDs.

NPD also found that the number of Internet users sharing music via P2P networks held steady at 14 percent during the quarter; however, the amount of music shared amongst those users increased by 23 percent. According to NPD, teens—often seen as the heart of illegal P2P song swapping—shared 46 percent more files during the third quarter of 2008 than in the third quarter of 2007; however, they also bought 34 percent more paid downloads.