Wednesday, April 18, 2007

US-Based CD Sales Plunge 13 Percent During 2006

US-based sales of CD albums plunged 12.9 percent last year, according to figures released by the RIAA this week. The decrease is the largest ever for the format, and complements information recently released by Nielsen Soundscan. Overall physical sales were worse, dipping a pronounced 13.8 percent. Broader music sales, which include digital and mobile formats, landed at $11.5 billion for the period, down from a year-ago total of $12.3 billion. The RIAA figures are based on unit volume and suggested list price calculations, an estimate that could cloud various pricing discounts. Meanwhile, digital and mobile sales climbed significantly, though the severe physical drop left little room for an offset. The digital category contributed $1.6 billion in sales last year, up from $1.3 billion in 2005. Of that, mobile transactions accounted for $774.5 million, powered largely by master ringtone sales.

The information could signal the beginning of a tailspin for major record labels, whose revenues are heavily drawn from CD-based albums. And recent, first quarter data suggests that the downward spiral is accelerating. During the period, CD sales dropped 20.5 percent, according to information released by Nielsen Soundscan. Those declines could accelerate a number of initiatives, including a potential shift away from DRM protections on digital product. Of the majors, EMI has already taken that plunge, though it remains unclear how the others will proceed. The CD sales drops may also inject more anxiety into licensing negotiations between the majors and iTunes, set to conclude at the end of this month. Meanwhile, non-traditional labels and concepts continue to emerge, including those tied to the CD. Just recently, Starbucks unveiled its Hear Music record label and announced its first artist, Paul McCartney. Others, including Time Life and Toronto-based Somerset Entertainment, are also pushing non-traditional, CD-based models.

As always, comments are welcome.


Post a Comment

<< Home