A Look At 2010 Music Sales

One thing that puts the music business in perspective is a look at the sales. Although Nielson Soundscan's numbers aren't the be-all, end-all, they do provide a pretty good idea of what's going on in our business. Here are a few fun facts about US music sales for 2010. The percentages are against those of 2009.

  * Overall Album Sales - 326.2 million units; down 12.7%
  * Physical Album Sales - 240 million; down 19%
  * Digital Album Sales - 86.3 million; up 13%

  * Digital Track Sales: 1.172 billion; up 1%
  * LP/Vinyl Sales: 2.8 million; up 14%

  * Digital formats accounted for 46% of all music purchases; up 40%
  * Digital album sales accounted for 26% of all album purchases; up 20%

If you look at the sales numbers, you very well can get the feeling that the industry is heading off a cliff, but there is a bright side. There were over 326 million albums sold (240 million of them CDs), and over a billion digital singles. That's still a huge amount of music that's being consumed. So while the numbers may never be what they were, it's still a huge business that's far from dead.

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Digital Music Gaining Steam

Already this year, four artists have broken Rihanna's sales record of 9.9 million for digital tracks that she sold in 2008 according to Soundscan. The artists that passed her are no surprise since they are particularly hot these days:
     Michael Jackson (11.3 million),
     Lady Gaga (11.1 million),
     Black Eyed Peas (10.3 million)
and Taylor Swift (10 million)

Next week, the 2008 digital album sales total of 65 million will be broken, as well as the mark of 1 billion total track sales, which shows that despite what some industry pundits had predicted, the digital side of the business is still growing.

But CDs are still selling, with 5 artists this week (Carrie Underwood, Michael Jackson, Andrea Bocelli, the cast of Glee, and Sony Music's That's What I Call Music compilation) over 100k.

Speaking of Michael Jackson, his “This Is It” companion album — which is really an album of hits — sold a little over 200,000 copies last week and went gold, which means that it’s sold over 500,000 copies in two weeks. This makes you scratch your head a little since another greatest hits album from Jackson, “Number Ones,” sold about 33,000 copies as well. At least for now, people can't get enough of his music and are willing to part with their cash for both hard and soft product.

Interesting Digital Music Facts

Here are some interesting facts about digital music that have recently come available through various online research organizations.

• The Apple's iTunes Store has increased its market share in the digital music arena, capturing 69% of the digital music market during the first half of 2009, according to the NPD Group. The rest of the top five: Best Buy - 16%, Wal-Mart - 14%, and Target and Amazon MP3, both at 10%.

• The iTunes Store continues to dominate music retail, grabbing a 25% share of the overall market while selling 2 billion (with a "b") tracks during the first half of the year, according to an NPD report. Wal-Mart leads all retailers in physical CD sales with a 20 percent share of the physical music market, followed by Best Buy at 16 percent and Target and Amazon tied at 10 percent each.

• CDs still comprised of 65% of all music sold in the first half of the year compared to paid digital downloads, which comprised 35% of music sales. The digital segment is growing fairly rapidly though, since the split was 80%/20% in 2007.

And a bonus digital fact:

• The percentage of US internet users who have created a social network profile jumped from 43% in 2008 to 59% in 2009, according to Universal McCann's annual Social Media Tracker report cited by eMarketer. The U.S. easily led all nations in social networking activity, but 7 other countries polled had higher percentages of internet users with a social network profile. Russia came in first at 85.3% after registering just a 23.1% penetration rate in 2006.

What these facts tell us is that internet use and digital music consumption is on the rise and won't level off for a while. That being said, CDs are still a huge business and will continue to be for the foreseeable future.

Digital Music Is About To Change

You can feel it in the air (or on the screen might be a better phrase). Digital Music is about to change, hopefully for the better. For years the major labels and every industry pundit has been predicting that music delivery by subscription will be the future instead of music downloading, and it looks like they might be right.

Why collect Gigs of downloads when you can listen to virtually any song you'd like to at any time, anywhere? That's the premise of subscription music, which until recently, didn't seem to have much steam behind it. Sure Rhapsody and Napster had a tad less than 2 million subscribers, but you really couldn't call that critical mass.

But in the last year, the free service Pandora has picked up steam and gave even the most casual listeners a taste of what subscription could be like. Now the buzz is that Europe's highly touted Spotify service is about to enter the States as they solve their licensing problems with the major labels, which the pundits see as a game changer.

But the 800 pound gorilla is lurking in the jungle. Rumor is that Apple will trot out a subscription service based around iTunes soon, which will open up the floodgates and change the industry forever. As industry consultant Ted Cohen said in an interview for my upcoming book, Music 3.0, "If iTunes announced subscription tomorrow, we’d be over the hump."

Yet questions remain. It seems like consumers now understand that they only get 10 songs per month for $10 from a download service as compared to 10 million songs on a subscription service. The bigger issues will become if and how the artists get paid fairly from that $10 and if publishers can build a mechanism to take advantage of the digital accounting so the songwriters can get paid as well (it's now done manually and costs too much to administrate).

The next 12 months should be very interesting indeed in the digital music world.