Music Download Sales and Streaming Online Increasing

Jennifer Lane

A new report shows that purchases of online digital music downloads increased by 29 percent since last year and now account for 33 percent of all music tracks purchased in the U.S. At the same time, according to The NPD Group, the leader in market research for the entertainment industry, the number of Internet users paying for digital music increased by just over 8 million in 2008 to 36 million Internet users.

Download Purchases Up, CD Sales Down
Unfortunately for the music industry, those increases come at the same time as a huge decrease in cd sales.  NPD's Digital Music Study, an annual tracking study covering the music industry, also revealed that there were nearly 17 million fewer CD buyers in 2008 compared to the prior year. "Rising incidence of paid downloads is a positive development for the industry, but not all lost CD buyers are turning to digital music," said Russ Crupnick, entertainment industry analyst for The NPD Group.

Consumers' reasons for purchasing less cds were primarily recession based - they were either just spending less on entertainment, or they said the price of cds was causing them to buy less.

Listening to Music Online is up
The report did find that listening to online music streams is increasing - specifically, awareness and usage of Pandora, a leading online radio station, doubled year over year to 18 percent of Internet users. The percentage of consumers claiming to listen to music on social networks - presumably sources like MySpace Music and Last.fm - climbed from 15 percent in the fourth quarter (Q4) of 2007 to 19 percent in Q4 2008.

More than half of teens (ages 13 to 17) listened to music online in 2008, a big jump from the 34% that did so in 2007. Among college- age Internet users, the percentage increased from 30 percent in 2007 to 41 percent in 2008. Internet radio’s popularity with younger demographics is growing as wireless access to streaming radio has become more widespread. 

-- Jennifer Lane, President, Audio4Cast.com, has a long career in Internet radio. Read her blog about the business of Internet radio and digital audio at  www.Audio4cast.com .

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