Dan Sabbagh, Media Editor
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Music sales worldwide are expected to plunge by about 11 per cent this year, making 2007 the worst year for the recording industry for more than a quarter of a century.
At Easter, industry bosses forecast a 4-8 per cent decline in revenues, but at least one of the four biggest companies is preparing for an 11 per cent tumble as the shift to digital starts to make its impact felt.
Retail sales, for which figures have been compiled since 1969, the year that the Beatles’ Abbey Road album was released, have never fallen by so much, although there was a 9 per cent decline in 1982 before the arrival of the compact disc.
Wholesale revenues, for which figures date back only a decade, have never fallen by more than 7 per cent in a year. That was in 2002 and 2003 when piracy and free – and illegal – sharing of recordings via internet sites such as Napster were rampant.
CD sales were down by about 20 per cent in the first half of this year in the US, the world’s largest music market, according to data released by Soundscan last week. Even allowing for growth in digital downloads, total sales fell by 9.3 per cent. The calculations are based on ten single downloads counting as one album.
The problem began in January after a surge in sales of digital music players over Christmas. Apple’s dominant iTunes online record store allows listeners to buy two or three single tracks in preference to a whole album, depressing revenues.
Piracy also remains widespread, as is listening to songs and watching music videos – legitimately – without paying on internet sites such as YouTube.
Rich Greenfield, an analyst with Pali Research, has predicted a 10 per cent decline in industry revenues in 2007, and again next year because, despite the growth in digital, CDs still represent about 85 per cent of the market. Another Christmas of digital music-player buying is likely to have a similar effect. “Explain to me why the market is going to get any better,” Mr Greenfield said.
A similar picture is emerging in Britain, the number three market after Japan. This week official data are expected to show that CD sales are down 10 per cent, or 6.5 million. A near-doubling of digital music sales to two million softens the overall decline only partially.
On the plus side for the music industry, some revenues – such as income from sales to mobile phones, from radio playback and a little from touring – are growing and are not included in the figures. Music companies are also preparing to promote CDs and their back catalogue more aggressively before Christmas.
Analysis
Amy Winehouse’s forlorn Back to Black sums up the state of the music sales: while festivals are jammed and iPods full, music sales are dismal. Some predict an 11 per cent decline in sales this year, which would make it the worst year since records began.
Christina Aguilera’s self-titled album is this decade’s bestselling album in the US, at 14 million copies. It’s number 26 on the all-time chart.
It is too easy legally to listen to songs on YouTube or MySpace, and sites such as iTunes have made it possible to buy the three best songs of an album rather than the lot.
Once fans go digital, they spend less. In the US, CD volumes are down 19 per cent so far this year.
There are some bright spots. Take That’s Beautiful World sold a million copies in 28 days in Britain. Universal Music, the market leader, says that its revenues are up 14 per cent this year in the UK.
There are new revenues, such as a cut of artist touring and merchandising. EMI has a piece of Robbie Williams. Mobile sales are not included in the data: they amounted to about $50 million at Warner Music between January and March. But CDs are still 85 per cent of the market and some companies do not expect to recover until 2010 or 2011.
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Cut the prices, cut the prices, cut the prices...
If this happens, they will sell tons of cds and digital music files. Instead of charging 99¢ each, charge 25¢ each for digital files. Charge $5.00 for cds. They'll make a fortune.
hhopper, Tarpon Springs, FL
I think that the decline in sales must, by extension, force the music industry, especially in the US and Canada, to examine its level of quality. More and more discerning listeners are moving away from the American Pop Garbage Machine and looking elsewhere. I haven't bought or downloaded an American music product in nearly a decade because there's nothing I want to hear. And I know many people who are in the same boat.
The music industry has had the habit of designing albums based on one or two good songs and perhaps eight pieces of filler which they know are crap. I know when I made mix tapes back in the 80's it was always one tune from this, two tunes from that. The industry is suffering because the 'digital revolution' means that nobody HAS to buy the filler. The indistry has to acknowledge that it's not producing good product and accept that we're not all listening to pop garbage or grunge metal.
And why should I shell out through the nose for an import when I can get it online?
Greg, North Bay, ON, Canada
I've bought more CDs this year than in the same period last year. Not one from a major band. One was a demo CD that is absolutely brilliant by the way. I can see the problem that they are talking about, I download music. I'm trying to find the rare stuff I have on vinyl, to commit to CD as I don't have a record player anymore. I do think the whole piracy threat is over-hyped though, there has always been music piracy, and although the web has made it easier, I doubt the amount is significant enough to affect album sales too considerably, for example. The reason people are not buying music is because it's too expensive. The big artists sell for a fairly hefty amount in the UK, when compared to overseas for example. I'd sooner see a plain cover and label, and have a little less cost. Its the music that counts after all, and besides, since the demise of the LP, covers just aren't the same anymore. Cut costs, cut prices and sales will pick up again.
Jennifer Hynes, Plymouth, England
Another well-written piece by your media correspondent, but when will the music industry cease harping on about piracy and realise that it's competition with DVDs and video games that are eating into their revenues? There's only so many hours in the day and so many forms of media fighting for our attention.
Mike Coyne, Galway, Ireland
To many options and to few good retail stores.
Cds still represent the best sound and if packaging and bonus add ons continue,along with sensible pricing,CDs will stay.
paul nemeth, sydney, sydney australia
I agree with Darren from Reading: 4 CDs already for me this month - each one wonderful from beginning to end. I rarely download music, and when I do it's to get a taste of what a band/musician is offering before going out and buying their album, or when I know that a band, for e.g. really only does have a few good songs. I love the effort that goes into CD jacket/sleeve production and supporting the bands and artists whose music I enjoy. Downloading music is great, but nothing beats CDs for me.
Anka86 "old skool?"
Anka, Melbourne, Australia
I guess I'm the only one bucking the trend then? So far this month I've bought 8 CDs, both online and in bricks-and-mortar stores. Granted, it's been a good month for releases [for me at least] and this is definitely not the norm. I'd certainly agree with the previous comment that the vast majority just isn't worth buying. Pretty much everything I buy is definitely not the over-hyped, over-produced pap that is considered "the top 10" these days. Also, nearly everything I buy isn't made up of 3 decent songs and 8 or so filler tracks. Again, I guess this comes down to not buying from the main stream market? I think there's been far too much pinned on a few "big" releases by the major labels. Invest in the product (i.e. new, interesting talents) and you might just have a product people want to buy!
Darren, Reading,
People will always want music.
As a teacher of mine - now retired head of Deutsche Grammaphone - used to say: "We are not in the business of selling CDs - who wants a ton of silver discs? - we are in the business of selling music."
Where music is stored is irrelevant. The market is shifting, not declining. Just because CDs are going to disappear does not mean that music is going to disappear.
Pink Paranoia, London, England
After much deliberation I have switched from buying "hard-copy", tangible music to (legal and paid for) downloads, and I am now consuming more music than ever before.
Simon, Sevenoaks,
The way I see it being able to download music for free is excellent as it means we all save some money.
On the flip side the music industry is a business, and without cashflow new bands won't be coming through, new releases won't happen and the music industry will fall apart at the seams.
Measures need to be taken to stop illegal downloading! New laws better online policing and higher penalties for people found to be downloading music illegally. I don't know how they'd do it but something has to be done for the future of the music industry!!!
Dan Hobson, Sheffield, UK
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