Music Sales Up! CD Buys Up!

[Rob]

The music industry is showing signs of renewed health, in part due to the surprising resilience of the CD format, according to a new study by The NPD Group, a consumer information research provider.

“After years of losing buyers, caused by many consumers who simply stopped buying music, the total number of CD buyers increased for the second consecutive year, growing 2% to 78 million [in 2011],” the company said.

Total music-track sales rose 4% last year, the first gain in many years. Paid download buyers increased 14% in 2011, to 45 million customers. Digital buyers also spent more at iTunes Music Store, Amazon AMZN +0.92%  MP3, and other digital music stores in 2011.

The average annual expenditure for digital music rose 6% to $49, and although CD sales declined, the decrease was not nearly as steep as it has been over the last five years.

“It’s so obvious what has happened in the last year or two,” said Russ Crupnick, senior vice president of industry analysis at NPD, in an interview Tuesday. “Consumers have a lot more ways to discover new music than they have had traditionally. Services like Pandora P -20.53% , Spotify and Rhapsody have made it easier to get a song you like into your head, and consumers are then going to iTunes or a physical store like Target and putting that song or album on their shopping list. With more mobile devices like smartphones and tablets, people are just spending more time with music.

“The quality of pop music been better recently, from Adele to Lady Gaga to Katy Perry to Susan Boyle, and people are responding to that,” Crupnick explained. “And 10 years after the advent of Apple’s   AAPL -0.10%   iTunes, far more people buy CDs than downloads.”

In our rapidly changing world, it is perhaps odd to suppose that a physical medium would still resonate with people. However, Crupnick said, there are still plenty of Baby Boomers and other listeners who just enjoy the CD experience in the car, and there remains a core contingent of consumers who find CDs to be the best way to enjoy the album format, which offers an assortment of songs from a favorite artist, tied to a unifying theme.

Interestingly, one of the most logical arguments for the CD â€" its superior, uncompressed sound quality compared to the 256 kilobyte-per-second or 320 kbps download â€" plays “a very minor role” in its popularity, Crupnick said. “It doesn’t generally show up on the radar screen as an issue.”

The industry, including giants like Universal Music Group VIVHY -5.42%  FR:VIV -4.24% , Sony Music SNE -0.34%  JP:6758 -0.77%  and Warner Music Group, would certainly prefer to keep the CD alive as long as possible, since they cost so much more than a typical download. A CD might go for $14 to $20, or more for a 2-CD set. Downloads of individual songs are usually 99 cents, with entire albums going for $4 to $10 online. To keep the format going, they have to negotiate tough terms with retailers.

“CDs are an interesting challenge. There’s an antagonistic tension between retailers that want things they can offer cheaply and music labels that say that after promotional costs, studio time and other expenses, they have to set a price high enough to make them profitable,” Crupnick said. “The labels have cut recording costs, reduced headcount, and made a lot of other adjustments, but it costs money to make these products.”

One other thing has clearly helped the music industry claw its way back to growth â€" a decline in piracy. The NPD report also noted a decline in unpaid music acquisition, such as P2P file sharing and trading music on hard drives. NPD estimates that 13% of Internet users downloaded music from a P2P site in 2011, down from a peak of 19% in 2006. In addition to giving customers more legitimate sources to find music, the industry has worked hard to crack down on file sharing sites.

“The music industry has some problems, but it’s still alive,” Crupnick said.

-David B Wilkerson

So thoughts? Is music getting better or is it all down to the fact, like the article says, music has become more accessible?

[Ty]

2 years ago, Limewire got shutdown

[Rob]

Well yes and no...

The people using LimeWire will logically just go to torrent sites which are safer and haven't been shut down. And the fact that people who aren't willing to buy music so use LimeWire will probably continue to not buy music afterwards.

Other thing is, Spotify, Last.fm and Youtube basically promote completely free music as you don't need to pay to use these services.

[Alex Smiley]

I kinda feel like it comes down to: if you like something and/or respect the person making it, you'll support them. Sometimes, that support is financial by buying the product.

That said, I do agree there's a lot more accessibility as of late, which allow people to listen to music and make more of a choice whether they'll pay for something later.

[brkendown]

I kinda feel like it comes down to: if you like something and/or respect the person making it, you'll support them. Sometimes, that support is financial by buying the product.

That said, I do agree there's a lot more accessibility as of late, which allow people to listen to music and make more of a choice whether they'll pay for something later.

Exactly, if I like a band/artist I'm going to support them. Say for instance Aaron Lewis/Staind. Despite have the access to most of the songs on youtube or torrents, I still buy everything they put out just because.

[Gary]

Well yes and no...

The people using LimeWire will logically just go to torrent sites which are safer and haven't been shut down. And the fact that people who aren't willing to buy music so use LimeWire will probably continue to not buy music afterwards.

Other thing is, Spotify, Last.fm and Youtube basically promote completely free music as you don't need to pay to use these services.

plus Pandora on mobile devices doesnt help either. Surprising sales are up!

[GM Franchise]

There are ways to get CDs cheap. That's how I do it and probably a lot of other people but I can see downloads being the main deal as to the resurgence of music revenues last year.

[Rob]

I've always bought CDs and take a lot of pride in my CD collection as it's grown to several hundred. I've never really got into Downloads as they've never really appealed to me. Something about not having a physical copy of your music worries me and puts me off. I think I'll always buy CDs as long as they're available.

[James Porter]

An old album on a record player is the best way to listen to music but like some of us here, I will still go out and buy a new CD that I like from an artist/band that I really appreciate.

[! JDM The Professional !]

I'll download an album, and if i like it, I'll buy it. I don't buy shit I wont like, so its a pretty good system I've got going

[Drama Queen]

CD's take up to much room, I love the concept of having all of my music stored in my laptop. I would rather own books and/or DVDs than CDs to be honest.