More Consumers Get Music Online Than Buying CD’s
NPD Group reported on Tuesday that more Americans bought digital music last year while the number purchasing compact discs declined sharply.
In NPD’s annual Digital Music Study of U.S. consumers, it said the number of U.S. Web users who bought digital music increased by over eight million in 2008, compared to 36 million in the previous year.
It said that meanwhile, there were nearly 17 million fewer buyers of CDs in the United States last year compared to the previous year.
Purchases of digital music downloads increased by 29 percent in 2008 over 2007, and now account for 33 percent of all music tracks purchased in the U.S., according to the research firm.
NPD said the decline in CD buyers "cuts across all demographic groups, but was particularly focused on teens and consumers age 50 and older."
"Rising incidence of paid downloads is a positive development for the industry, but not all lost CD buyers are turning to digital music," said Russ Crupnick, NPD entertainment industry analyst.
Overall, there were 13 million fewer music buyers in the U.S. last year compared with the previous year, NPD said. There was a 19 percent drop in CD sales as well.
Only 58 percent of Internet users reported purchasing CDs or digital music downloads last year compared with 65 percent in 2007, said NPD.
The research firm also said that the primary reason given by consumers for not purchasing CDs was that they spent less on entertainment because of the recession.
However, they also expressed concern over CD prices.
Even though music purchases might be lower, NPD said music listening appears to be increasing. It added that awareness and usage of online radio stations doubled year over year to 18 percent of Internet users.
More consumers were also listening to music on social networks like Myspace, particularly teenagers, said NPD.
The study found that close to half of U.S. teens listen to music on social networks, up from 37 percent in 2007.
"The trends we’re seeing in our consumer tracking studies are evidence of the continued transformation of the music industry," said Crupnick.
"Just as music piracy and the advent of digital music ended the primacy of the CD, we are beginning to see new forms of listening challenge the practice of paying for music."
"The music industry now has to redouble efforts to intercept and engage these listeners, so they can create revenue through up-selling music, videos, concert tickets, and related merchandise."
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