How The Music Business Is Changing

The conclusion of most industry pundits at the Digital Music Forum in Hollywood this week all agree that the music "business" is in tough shape. But perhaps the grimmest of statements comes from NPD Group’s Russ Crupnick, who points out that the number of music buyers has dropped from 153 million in 2006 to 132 million in 2008.

Crupnick also states that spending of each of those consumers is down from $79 a year to $35, which he says is the result of the proliferation of free, advertiser-supported music services, which are cannibalizing digital sales. Yet despite the rapid growth of digital downlads, almost two-thirds of music consumers still purchase CDs only.

BigChampagne’s Eric Garland claims, as buyers shift from full album purchases to singles, that lower prices per unit have not prompted them to spend more on music. Also, the number of free streams of popular hits is more than 10 times the total of paid downloads, and that’s just on legal services.

What this adds up to is the fact that a tough time is getting for the record labels, while it's a golden era for fans. For artists, it's too soon to know.