According to the NPD Group, CD sales continue to decline as online digital music sales flourish.
Why pay for a whole CD when you only need to pay for the songs you like right? Audio quality takes a back seat as online digital sales grow more than 175 percent inthe first half of 2005 alone. That means more than 155 million music tracks were downloaded via legal online music services during that period. According to NPD, nearly seven in ten households haveexperience digital music in one form or another. "The music industry remains in a state of flux between physical CDs and digital music," according to Russ Crupnick, president ofNPD’s Music and Movies division. "The growing consumer acceptance of digital music has started to help record companies offset declines in physical CD sales, but the opportunities available inthe digital realm have only just begun to be tapped." According to NPD, 69 percent of Internet-using households have at least one digital music file on their home PC hard drive. Theaverage computer music user has 340 music files in his or her digital music library, which is up 24 percent compared to the same period a year ago. "We’re seeing a slow shift from illegalP2P downloading to use of legal digital music services," Crupnick said. "In the early days of digital music, the majority of digital files came from illegal P2P file sharing services. Nowwe’re seeing a rising incidence of legal digital music downloads and a significant slowing in the number of P2P users, as legal services continue to gain traction." How is the musicindustry reacting to this? Well just today talks between the major music labels and Microsoft came to a halt over royalty rates. The labels are demanding fees of $6 to $8 per user pre month for the Microsoft service. Apple has also reported problemswith the music industry over the price of their per-song download price. The record labels want more money for each song downloaded.
