Digital Music Sales Decline in 2013 for First Time Since iTunes Music Store’s Launch

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Digital Music Sales Decline 2013Digital music sales in the U.S. declined in 2013 for the first time since the launch of the iTunes Music Store in 2003, according to a report this weekend from Billboard. For the year, sales of digital tracks fell 5.7 percent to 1.26 billion, while digital albums fell only slightly, about a tenth of a percent, to 117.6 million.

The culprit, according to music industry executives, is the continued rise in music streaming services like Pandora, Rdio, and Spotify. Yearly numbers for the digital streaming portion of the music industry have yet to be released, but executives anticipate strong growth in that category that will offset most or all of the losses in individual digital sales.

Apple, which popularized digital music sales with the iTunes Music Store, has long held firm to the idea of sales over subscription-based streaming. While the company now offers the iTunes Radio streaming service, it acts more as a companion to the iTunes Store than as a full-fledged streaming solution. Lacking the on-demand track selection found with rivals like Spotify, iTunes Radio encourages listeners to buy the tracks they like, with deep ties to the store, advertisements for new music, and a built-in listening history that gives users one-button purchasing of their favorite songs.

But Apple’s iTunes Radio initiative, available for free on every iOS 7 device and Mac or PC running iTunes 11, gives the company a huge install base right out of the gate, and offers opportunities for substantial ad revenue, even if consumers don’t regularly purchase tracks from the iTunes Store. The company is also expanding the service aggressively, with plans for rollouts in the United Kingdom, Canada, Australia, and New Zealand during the first part of 2014. This push may help insulate Apple’s digital music business from any continued decline in traditional digital sales.

Looking at the broader music industry overall, Billboard also reports that physical music sales in most categories continued their decline. Combined digital and physical album sales were down 8.4 percent for the year, to 289.4 million units, while physical albums alone fell 14.5 percent, to 165.4 million. A major exception was vinyl, which continued its resurgence with growth of over 36 percent, to 6 million units.

The final breakdown of 2013 album sales: physical albums at 57.2 percent, digital albums at 40.6 percent, vinyl at 2 percent, and cassettes and music DVDs at 0.2 percent.

Featured image via Shutterstock.

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12 Comments Leave Your Own

geoduck

I do think streaming is mostly responsible. I wasn’t interested for a long time but as connectivity around here gets better year over year I’m starting to warm to the idea. iTunes Radio looks good but it’s not here in Canada as of yet. The option does not even appear.

I am utterly baffled by any sales of vinyl. My memory of vinyl was poor recordings, iffy sound quality, and worst of all the sound quality would noticeably degrade with every play, even if I used the minimum arm weight possible. I literally had to buy a record, play it once to see if it was even intact enough to rip, and then I’d copy it to cassette and later CD so I could play it as much as I wanted. “Vinyl for archive, tape for use” was the rule in the early 80s. Now that we have clean crisp, reliable digital recordings, either on disk or download, I’m utterly baffled why anyone would want to go back to crappy vinyl. Sure they say it sounds “warmer” but to my ears warmer just means with hissing, pops from drifting dust, and scratches.

Jamie

It all depends on playback equipment. With right setup, music played on vinyl is like being hit in the gut with a cannonball, and has a range compressed digital audio can’t match. Another issue with digital audio is the use of analogue speakers without a proper conversion unit in the chain, this distorts the sound from the get go. I doubt most people today have ever even heard a vinyl album in all its glory (the retro portable turntables in fashion at the moment are not going to sound good no matter what one does), or for that matter have a system capable of the kind of high-res playback the engineers were listening to when they mixed their tracks (they weren’t using Garageband on iPad with earbuds, that’s for sure).

These are subtle matters and audiophiles are definitely in the strictest of minorities these days, if one just wants to listen to music it’s all good. 

Another issue regarding streaming, though: one might assume that leveraging royalties in streaming agreements would be a boon for people making music, but in reality payment to artists is poop with these services if they are an artist that doesn’t receive fat advances from a large music label. That industry is still totally upside down and leaning sideways (though much of it is their own fault for a variety of various and sundry reasons) in spite of the many innovations that have occurred over the past number of years.

vpndev

I am sure we’ll hear weeping and moaning from RIAA and the record labels but, as I read it, their revenue went UP.

It seems that revenue from streaming made up for, and a little more, the decline in sales. That would be good for them, actually, because streaming revenue is ongoing whereas a sale is a one-time thing. But you won’t hear that positive aspect from RIAA, I’m certain.

geoduck

Jamie:
It could be. I worked at a theater that had very good equipment, circa 1980, so it’s very possible that the turntables are better now. That doesn’t however, resolve the wear issue. That is unless vinyl is a heck of a lot more solid than it was back then or they’ve figured out some way to read the grove without touching the disk.

vpndev

My ears are no longer good enough (if indeed they ever were) to discern the difference between vinyl and digital.

It seems that most digital listening these days is from compressed media (mp3s etc) but CD-quality audio has very little. And let’s not forget that most vinyl recordings were compressed (some more, others less).

As far as touch less-playback is concerned - there are such systems around. But they’re expensive at $10K and more. They use a laser pickup something akin to the laser system in a CD player.

More esoteric is (was?) the system that, in essence, photographed the groove walls of a disc. This was mainly for restoration of old, badly-worn 78’s. The idea was to select the less-damaged parts of the groove rather than have a stylus physically follow the damage (usually about half-way up each wall). I can’t find the reference for that system now unfortunately.

marcsten

I would echo Jamie’s comments regarding sound from vinyl. And yes, decent turntables out today are better than most that were around 30 years ago, although there were some fine decks around then too. The biggest change is that since vinyl has becaome basicaly an audiophile niche product the last 10 years or so, the quality of the records themselves has improved dramatically. A well care for record played on a quality turntable will last forever. I have had far more problems with optical discs refusing to play due to a smudge or scratch than my vinyl, much of which is 25 or more years old, and has been played hundreds of times. In short, even if the theater had excellent equipment, if you had a poor quality record or one that had been abused (pop, scratch, skip, etc) good equipment may not be able to resurect it. I think that’s what you experienced.

Lee Dronick

Perhaps because “we” have already bought the music that we wanted. Replaced our physical copies, the ones not on CD that we haven’t converted to digital. I am not buying as much as I had been, but I still buy a few tracks a month.

As to streaming music. We have been listening to iTunes Radio a fair bit and it has given me ideas for music that I wanted and have gone on to buy. My wife’s new car came with 6 months of free Sirius Radio and she has been giving me shopping lists of songs that she wants me to buy. I have bought some music that I heard as sound tracks in movies.

Paul Goodwin

One of the biggest problems in music sales these days is the music itself. It’s canned, copied reshuffled and spit out, in many cases now by computers and not song writers. The bulk of the radio and streaming music these days are playlists from only a couple of services that they all rent from. There are some good artists out there doing some good stuff, but it’s lost in the giant sludge pile of music that is aired, streamed or put on sites to buy. After you listen to any service for a even a couple of days, you will have found everything you want, and sadly the pickins are slim these days. These days, it’s all about what the artists look like, not what they’re playing. They’re all told to sing alike and play alike, and many don’t play anything (all the music being done by studio musicians told to make another one that sounds just like this one). IMHO, the last 5 years of music has been the worst in the history of American music.

Lee Dronick

Spot on Paul, I no longer listen much to broadcast radio. There are precious few local DJs with a “show” where they get to put together the playlist.  The jazz and blues station broadcast from San Diego State University is still pretty good, I hear new stuff that I like.

Paul Goodwin

Lee. Yes, there are still a few stations playing decent stuff.

furbies

I too remember the “Vinyl for archive, tape for use” way of doing things.

I’d buy an album (LP) take it home, and then play it through once while recording to cassette tape. Flog the death out of the tape and then ever so carefully make a new copy to tape, and then continue on.

I have still have my vinyl stored safely (I hope) against the day I ever get another decent turntable.

I wonder if my ancient Star Wars (ep 4) sound track album still plays ?

ctopher

I’m a vinyl guy and I agree that with care, they will last forever.

In my experience, iTunes Radio is still a work in progress. Maybe it’s their catalog or their programmers, but the selection is not very deep and I end up hearing the same songs again and again. I listened to their Christmas channel over the holidays and the selection was thin.

I expect the hits category to be repetitive as it is on SirusXM but when I choose a 70s or 80s channel I expect to be able to listen for several hours before hearing the same song again. That’s true with SirusXM, Pandora and Slacker. No so with iTunes Radio.

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