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Digital Music Sales Continue to Slide

Tomorrow Media

tim_biopicBy Tim Moore


Audience Development Group herein offers up these crucial findings from Harker Research. If your sellers are living in fear, assuming predatory technologies are threatening Radio, read this carefully then recall our circulated communiqué on the latest car radio research proving Radio’s dominance in the so-called “connected car.”

Digital Music Sales Continue Slide

This month marks the eleventh anniversary of the launch of the iTunes store. While Apple didn’t invent music downloading, many mark the launch of the iTune store as the boost that moved downloading into the mainstream conscience.

Downloading grew exponentially in the first few years that followed, but more recently growth has slowed. It became obvious a few years ago that if the deceleration of growth continued, sales could start to actually decline.

Sure enough, after reaching a peak of 1.34 billion track sales in 2012, 2013 saw the first ever drop in digital music sales. According to Nielsen’s SoundScan, digital track sales declined 5.7%, to 1.26 billion songs last year.

Digital album sales, something that both Apple and Amazon have worked very hard to develop, were essentially flat at 117.6 million units.

Was 2013 a turning point in digital sales, or just a pause in digital’s continued growth? First quarter sales suggest the former. The latest data shows digital downloads continuing to slide, if anything a downward trend that appears to be accelerating over last year’s pace.

As reported by Digital Music News, The first quarter of this year saw sales decline 13.3%. Tracks declined 12.5%, while album sales were down even more, down 14.2%.

CD sales were down 20.5%, but despite the decline, CD sales still outnumbered digital album sales. Digital album sales totaled 27.8 million, while 31.9 million CDs were sold.

Listeners in growing numbers are choosing to stream music over purchasing it. According to Digital Music News, there were 34.3 billion on-demand song and video streams during this year’s first quarter, a 34.7% increase over first quarter 2013.

The rapid deceleration and now decline of digital music sales demonstrates that in a digital world fortunes can change very quickly and very few things can grow indefinitely.

Pandora Media appears to be following a similar arc.

After a meteoric rise in its first few years, the growth of Pandora is slowing. According to Triton Digital ratings, Pandora hit a high of slightly over 950 million hours of listening in January, but declined by 3.8% in February.

More significantly, while Pandora grew by 49.7% from February 2012 to February 2013, the service grew by only 11.2% between 2012 and 2013 over those same months.

Given the rate of deceleration of Pandora’s growth, it is likely that the service’s metrics will turn negative this year.

This does not mean that total streaming will decline any time soon. It will probably continue to grow for years to come, although it too will follow the inevitable arc of growth, then decline.

Pandora ominous trend just proves that a seemingly dominant service may one day be forced to share the stage with newer streaming services such as Beats Music, something ADG predicted two years ago.

Thanks to Richard Harker for this important research outcome.