With 2010 in the books, we thought it would be a good time to do a quick roundup of Nielsen SoundScan data and other music sales trends we’ve seen so far (keep in mind, the most complete barometer of the industry’s financial state, our annual shipments data including all physical, digital, and mobile formats, is still to come).
According to SoundScan, digital albums grew by 13% versus 2009, and although digital track sales only rose by one percent, revenues from those sales likely increased by significantly more as variable pricing took hold in the marketplace. With the Christmas week setting a sales record of 2.8 million digital albums, in addition to 44 million individual tracks, 2010 saw overall digital sales growth of 5.8% (calculated using SoundScan’s “TEA” method). Additionally, by that same methodology, if both individual track downloads and album downloads are combined, legal digital song downloads in the U.S. exceeded 2 billion in a year for the first time. Please note: that represents nearly 6 percent growth in the volume of digital sales. That fact is not always appreciated based on some reporting that only counts single track downloads.
The growth in digital albums did not completely offset the decline in physical albums. SoundScan reported 240 million CD sales in 2010, representing a nearly 20% decline versus 2009. Overall album sales, including both physical and digital units, were 374 million in 2009 vs. 326 million in 2010, down 13%.
As we and other industry observers have noted, comparing sales numbers only reveals part of the story. Perhaps more telling about the direction in which the music market is headed, 2010 saw enormous growth in online streaming music and access models. Although the growth of services like Vevo and Pandora have been well documented, the growth of revenues from streaming services is becoming more significant. Preliminary estimates for 2010 put SoundExchange’s royalty payments at about $250 million, which would be more than 60% growth versus 2009.
Further, music continues to be the most commonly purchased digital content according to a recent survey from the Pew Internet & American Life Project, which showed that a third of internet users have purchased digital music online.
The point here is not to put an overly rosy gloss on a challenging year. That’s not realistic. But understanding context and the full picture is important as we all try to digest the data we see in a rapidly changing marketplace.
Joshua P. Friedlander, Vice President, Research and Strategic Analysis, RIAA