The Decline Of The Disc

Although CD sales continue to move in the direction of records and tapes, music industry associations are finding digital music sales are at least partially offsetting the decline of the disc.

Shipments of tangible music formats were down in the first half of 2006, the RIAA reported October 12th, while downloadable music sales in various formats have shown sizable gains.

Record shipments, including CDs, music DVDs, vinyl records, cassettes and other physical formats decreased 15.7 percent to about 277.6 million units in the first half of 2006, according to the organization. The estimated retail value of those shipments, $4.1 billion, represents about a 15 percent drop from a year ago, according to the RIAA.

Those findings correspond to Nielsen SoundScan’s figures for the same period, which tallied 435 million albums – in both physical and digital formats – sold in the first nine months of 2006, down from 439 million sold during the same period in 2005.

In contrast, digital formats grew nearly 87 percent in the first half of 2006, and now make up 18 percent of the overall industry value, the RIAA said. These formats include downloads, kiosks and digital videos. To break it down, the six-month figures revealed sales of 286.3 million digital singles, a 71.3 percent increase. Full-length digital album sales figures were even more impressive, with 12.3 million units sold, a 112 percent increase over 2005 numbers.

Shipments of mobile formats, which include mastertones, ringbacks and artist-related content, demonstrated enough growth (nearly 98 percent) that the RIAA reported the introduction of a new award – the Gold and Platinum Award recognizing Mobile Mastertones – in June.

The overall estimated value of the industry for the first half of 2006 was reported at $4.9 billion. That figure includes revenue from both physical and digital products.

RIAA Chairman and CEO Mitch Bainwol said the numbers represent a new era in the music industry.

“The music community is embracing the digital age,” he said in a statement. “While we’re encouraged by several promising signs, no transition happens overnight. We’ve made meaningful strides against the theft of music online and on the street, labels continue to offer and experiment with a variety of digital distribution models, and fans’ appetite for music remains strong,” Bainwol said.

“Significant challenges remain. Online and hard goods piracy continue to hit the industry hard and no doubt had an impact on our mid-year results,” he continued. “Competition for spending on entertainment, especially in a tough economy, likely played a factor, too.”