Music Revenues Fall 7% Despite a Sharp Drop-off in Piracy Recorded music sales in America plunged another 7% to about $6.2 billion last year as the sharp 16% drop in CD revenue more than offset gains in digital-media sales, according to a report released this week by consultant Strategy Analytics. Overall sales fell despite the fact that far fewer people are illegally downloading music tracks through peer-to-peer services than did a few years ago, according to a separate report.

Digital music sales will overtake CD sales for the first time next year as more people switch over to iTunes and MP3 files. CD spending in the U.S. will fall $1 billion this year to $2.7 billion, while online music sales will hit $2.8 billion. By 2015, single-track downloads will represent about 40% of online-music revenues, followed by album downloads (32%) and advertising and subscription services (14% each).

"Digital music is not developing as fast as expected," says Martin Olausson, director of digital media research at Strategy Analytics, in a statement. "While online revenues will expand further over the coming years, the overall size of the recorded music industry will continue to contract as record companies struggle to identify growth strategies."

Such trends reflect a trend that started shortly after Apple (AAPL) introduced its first-generation iPod in 2001. By 2008, Apple passed Walmart (WMT) to become the largest music retailer in the U.S.

Illegal Downloads Decline
After LimeWire Shutdown

The Recording Industry Association of America (RIAA), which hasn't released 2010 numbers, said 2009 retail sales from physical media like compact discs and albums dropped 20% from a year earlier to $4.38 billion and more than offset a 19% jump in sales from digital sales. Overall, U.S. music sales fell 12% in 2009 to about $7.69 billion, according to the RIAA.

Illegal music downloads have fallen off markedly since peer-to-peer (P2P) file-sharing giant LimeWire shut down in October 2010. The number of P2P users downloading music late last year fell almost 45% from three years earlier to about 16 million people, NPD Group said in a report released last week. Additionally, the typical P2P music user downloaded an average of 18 tracks during the fourth quarter of 2010, just half of the average from the fourth quarter of 2007, NPD Group said.

"In the past, we've noted that hard-core peer-to-peer users would quickly move to other Web sites that offered illegal music file sharing," said Russ Crupnick, entertainment industry analyst for NPD, in a statement. "It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by Limewire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music."

Regardless, such a trend towards digital and away from physical are being reflected globally as well. Worldwide music fans purchased $17.4 billion worth of music last year, marking an 8.4% drop from a year earlier and a 44% plunge from a peak number of $27.3 billion in both 1998 and 1999, as a plunge in compact-disc sales more than offset gains in digital revenue. PaidContent reported this week, citing a report from the International Federation of the Phonographic Industry (IFPI). Sales of physical media i.e. CDs, fell 14% last year and are just half their 2005 levels, according to the report.

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Sum of Squares

The song "The Line Keeps Repeating" by Brown and Griffin sums it up. Listen, and laugh!

April 16 2011 at 2:23 PM Report abuse rate up rate down Reply

does the phrase 'reek of stench' mean anything to you?... i haven't heard a decent, melodic song for maybe 10 years. most new 'artists' are, screamers, posers, or 'anti-somethng'...who cares?? music is supposed to make you feel good, not angry or confused...

April 04 2011 at 7:41 AM Report abuse +1 rate up rate down Reply

The music industry continues to go headlong into the toilet where it belongs. First of all, if someone still wants to get music downloads for free, there are still effective ways to do this. However, even with that problem, there isn't much new stuff worthy of downloading.The fact is, as many of you have already pointed out, there is just very little good music being produced these days. Once in a great while, there is a good tune that you may hear here and there. However, the mainstream popular stuff being churned out for the younger music purchasing market that passes for music is largely crap. I and a lot of other people don't consider rap and its derivitives music in the first place. And, much of hip hop and similar urban trash should have died years ago. I'm surprised any of it has lasted this long. I can't watch music award shows anymore when those "molokkas" with thier "yo, yo, yo's" start gesturing, grabbing their "johnsons" and get into that "gangsta" rap drek. This is talent? C'mon!! That said, there is also very little, if anything, in the rock music category that is noteworthy or worth listening to these days. The stuff that is being produced for the mainstream music market is just remarkably crappy. None of it has any legs or long standing appeal and value. Nobody is going to listen to or remember 90% of the sh*t that is coming out of the music industry these days. It's almost all entirely forgettable tripe.

April 03 2011 at 11:36 PM Report abuse rate up rate down Reply

I have been a record collector since the early 50's of 45's and even some 78's before Rock and roll and this article is exactly what I always surmised: today's music flat out stinks! The RIAA has always moaned and groaned that file sharing and piracy are the reason that sales have dropped. This article proves conclusively that today's music is just not that good.

April 03 2011 at 7:13 PM Report abuse +2 rate up rate down Reply

Do you mean to say Americans are finally waking up to the fact that the music industry primarily produces crap!? The stuff that passes for music these days is deplorable. I hope all of the talentless boobs go broke, from the artists down to the producers and record companies. With the exception of Broadway, there's been very little good music produced since 1969.

April 03 2011 at 4:21 PM Report abuse rate up rate down Reply

Maybe it's because people like me have boycotted the purchase of music ever since Napster was shut down. I haven't paid for a single track since.

The RIAA is responsible for this downturn in music sales. The fans became the enemy and now the music industry is paying the price.

I hope they rot in a self-made hell.

April 03 2011 at 6:23 AM Report abuse +2 rate up rate down Reply
1 reply to shortschoolbus's comment

that you don't pay for music, although your choice, is nothing to be proud of...

April 04 2011 at 7:37 AM Report abuse rate up rate down Reply

Now that limewire has closed for business maybe some decent artists and bands will appera as it will seem more worthwhile to them. Hope it happen anyway. Music is rubbish nowadays.

At least the music industry will complain less now over nothing.

April 02 2011 at 8:25 PM Report abuse +3 rate up rate down Reply



April 02 2011 at 12:24 PM Report abuse +7 rate up rate down Reply
1 reply to madddddddddddddd's comment

Maybe record companies should find bands like floyd, or crimson, or the beatles. I mean no one cares about lady gaga, or Beyonce, or Rihanna, or Katie Perry, and for god sakes why would a serious music listener buy the music of a 13 year old boy. There is no meaning in music today, and many seek meaning in music.

April 02 2011 at 3:08 PM Report abuse +4 rate up rate down Reply

The Music Industry is a CHRONIC LIAR! They have been crying POOR MOUTH since the 1970's DON'T BELIEVE ANYTHING THEY SAY! They are making TONS OF MONEY on Digital Downloads that cost them ALMOST NOTHING to produce! Their profit on downloads is 90 percent. The largest cost with them are royalties to the artist snd song writer. Unlike with a Physical CD, there is nothing to manufacture, print, press, store, transport and virtually no labor costs associated with a digital download. They are cleaning up with downloads yet they continue to cry, cry, cry! And the Music Industry Media is just propaganda outlet for them. The Music Media NEVER challenges them on their lies, just prints them. They've been running this scam for 40 years now. Think about it. Every story you have every read in your life about the Music Industry is one about it being in BAD SHAPE! Well, you know how it works. If you tell the same lie over and over again, eventually people will believe it too be true!

April 02 2011 at 11:18 AM Report abuse +4 rate up rate down Reply