Business Matters: Why Are Track Sales Down in 2013?

music

(from billboard.biz, April 23, 2013)  While digital album sales are up 9% this year, U.S. track sales are down 2%.  This is the first year track sales might show a year-over-year loss, but throughout the years, the rate of track sales growth has fallen sharply.  Since iTunes launched in 2003, people are less likely to buy digital versions of songs they already own on CD.  A deficit in the digital marketplace is unusual, but fewer new download buyers are entering the marketplace.  Consumers are now shifting their listening from downloads to streams, making downloads show its age just like track sales.

Digital albums have been ahead of tracks’ rate of growth for years.  In 2006, track sales rose 65% while digital album sales grew 100%.  While in 2007, the rate of growth had declined by 20% for tracks.  As the rates of growth have slowed due to digital downloads peaking, tracks have fallen into negative territory before digital albums.  If this trend continues, digital albums will be in the negative territory in just a few years.

Many believe that Apple’s Complete My Album feature and the rising market share of Amazon MP3 are helping prop up digital album sales over track sales.  With Apple’s Complete My Album feature, consumers who have already purchased one or more tracks from one particular album can obtain additional tracks to that album at a discounted price.  With Apple’s feature, track sales will continue to decline as Complete My Album accounts create a greater share of the digital album purchases.  Amazon MP3‘s are similar to that of Complete My Album.  Amazon discounts and regular sale prices the digital albums rather than individual tracks.

Even though tracks are seeing a negative territory this year, the concern is more on the overall slowing of the download market.  The music industry needs to realize that U.S. download sales may have peaked, even though digital albums or tracks may be negative.  New innovations such as Apple’s upcoming Internet radio service or cloud-based storage is now in question if it will lead to an increase in demand.