Digital 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.
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