Downloading Increases While CD Sales Decline

CD sales were down and music listening and digital download purchases were up in 2008 but you won’t find anyone popping bottles of bubbly in celebration of this news, if only because online music sales have yet to replace lost CD revenue.

And there’s more information where that came from – market research company The NPD Group.

According to NPD, the number of Internet users paying for music downloads increased by more than 8 million in 2008 to total 36 million. Purchases of online music increased by 29 percent since 2007 and now account for 33 percent of all music tracks purchased in the U.S. On the downside, there were 17 million fewer CD buyers in 2008 than in 2007.

“Rising incidence of paid downloads is a positive development for the industry, but not all lost CD buyers are turning to digital music,” said NPD entertainment industry analyst Russ Crupnick.

NPD also says the decline in CD buyers cut across all age groups, but was particularly evident in teens and folks over 50. While the drop in CD purchases made by Baby Boomers is hardly good news for the music industry, NPD’s contention that CD sales dropped among teens is extra disheartening because people often develop their music purchasing habits while they are teenagers. Simply put – if teens purchased fewer CDs in 2008, it’s a good bet the final report for 2009 will be an even bigger loss.

Along with fewer teens and boomers purchasing CDs comes the news that there were 13 million fewer music buyers in the U.S. last year than in 2007. Think about that – 13 million fewer music buyers. Where did they all go?

Of course, some of them, to put it delicately, kicked the bucket. But The NPD Group didn’t pull that figure out of their collective hats. Could it be that a good chunk of that 13 million switched from buying music to stealing music?

NPD also states the decline in music purchasing was led by a 19 percent drop in CD sales, and that only 58 percent of Netizens reported purchasing CDs or digital downloads in 2008, versus 65 percent in 2007.

According to NPD, consumers blamed the drop in CD purchases on the economy; with most saying they had cut back on all entertainment expenses. Furthermore, some consumers feel CDs are too expensive, and some even say they’re quite happy with their current music collection.

Consumers also echoed remarks from years past in saying they preferred purchasing individual tracks online over buying physical CDs because online buying meant they got only the tracks they wanted, as well providing instant gratification for new music.

But there were a few bright spots in NPD’s report. While buying music is down, listening to music is up. The research company said awareness and usage of popular Internet radio service Pandora doubled year over year to 18 percent of Internet users, with one-third of the Pandora-aware crowd ending up using the service.

NPD also said the percentage of consumers claiming to listen to music on social networking sites actually increased from 15 percent in 2007’s fourth quarter to 19 percent in the same period during 2008. What’s more, nearly half of U.S. teens are listening to music via social networking environments like MySpace.

While the latest NPD report doesn’t bode well for the recording industry, it does indicate that music fans will purchase music and patronize Web sites that legally provide music when given the chance. It’s also a further sign that the Internet is growing as a listening conduit, and that more music consumers are looking to the Net for new music rather than rely on their local music radio stations.

“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 upselling music, videos, concert tickets and related merchandise.”

Lotus Blossoms

One of the first musicians to sell directly to fans – Prince – has cooked up a new Web site.

Set to launch March 24, the new site is called, and the Purple One is promising “unprecedented” access to content both old and new. Fans will also be able to download three new studio albums – LOtUSFLOW3R, MPLSoUND, and his collaboration with Bria Valente, Elixer. Users will also be able to purchase concert tickets and view performance footage of the artist formerly known as a symbol. will also have a video from each of the three albums when the site launches – “Crimson and Clover” from LOtUSFLOW3r, “Chocolate Box” from MPLSoUND and “Everytime” from Elixer.

Of course, nobody rides for free when Prince is in the driver’s seat. The annual membership fee is $77.

Conceived by Prince and boasting a “high-end 3-D” style design, features three unique worlds built around the look, feel and sound of the artist’s three new albums.

The site will also contain information not usually accessible by the public, such as information on those secret shows Prince has been known to pull off from time to time.

Speaking of secret shows, Prince will do three clandestine appearances in Los Angeles on the March 24 launch date. Presumably, those shows will not be secret to fans who have $77 to spend on an artist’s Web site. Prince will also do three straight nights of “The Tonight Show with Jay Leno,” March 25-27.

This isn’t the first time Prince has come up with a subscription Web site to communicate directly to his fan base., later called, was also a direct-to-fan conduit featuring music downloads, photos and concert information. Prince was also the major act to sell a new album exclusively on the Net, 1997’s Crystal Ball.

Prince’s latest Web site is yet another reminder that the DIY method isn’t just for indie bands trying to build their fan bases. Who needs a label when you already have the name, the fan base and the box office drawing power?