Music Sales Drop Levels Out

U.K. music sales are no longer dropping at the alarming rate of the last few years and there are signs they may even be leveling out.

The value of U.K. recorded music sales dropped nearly 7 percent in 2008, according to the Official Charts Company.

Last year’s figures, which are in the Entertainment Retailers Association (ERA) annual yearbook published March 23, show the number of sales dropped 1.9 percent and the overall picture isn’t as bad as many in the industry expected.

In 2007, sales declined 15 percent in value and 11 percent in volume, and the collapse of major British retailers including Woolworths and Zavvi had some market watchers fearing the 2008 numbers might be just as gloomy.

“After years of bad news about music sales, these figures give hope that the downward trend is beginning to flatten out,” says ERA director general Kim Bayley. “The collapse of Woolworths was potentially disastrous, but retailers worked around the clock to secure alternative supplies.”

A key factor was the soaring sales of downloads, as sales of single tracks increased 41.5 percent to 110.3 million units. Sales of album downloads were up 65 percent to 10.3 million. By the end of 2008, downloads accounted for 96 percent of single sales and 7 percent of album sales.

Bayley said the increasing move toward DRM-free formats has helped drive download sales to “an unprecedented high.” The trend is continuing in 2009, as year-to-date figures show single track downloads up a further 44 percent and album downloads up 67 percent.

The data on music sales forms part of ERA’s annual survey of the entertainment market, which show that last year’s surge in video games sales helped entertainment retailers grow their overall business 3.8 percent by volume and 5.1 percent in value.

The ERA yearbook says games software accounted for 36.7 percent of the entertainment retailing market, just behind video at 40.5 percent and well ahead of music at 22.8 percent.

The year’s games sales were driven by the success of Nintendo’s Wii console and DS handheld platforms. Games for the two platforms accounted for more than half of the entire games software market.

“The success of video games is helping entertainment retailers withstand the impact of the financial crisis,” Bayley explained. “No sector can be immune from the problems of the wider economy, but these results show that as long as suppliers come up with new and innovative entertainment products, then consumers will respond positively.

“Strong sales of Blu-ray discs and music downloads show that the consumer’s appetite for entertainment is undimmed. The challenge for both suppliers and retailers is to find products which will inspire the consumer and then present them in an attractive, accessible way.”