Archive for the ‘Research & Statistics’ Category

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Legal download sales up 47%

March 15, 2007

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A recent market research done by NPD Group reports that legal download sales were the fastest growing digital music category in 2006 and that while user growth on illegitimate peer-to-peer services slowed, the total number of files downloaded on file-sharing networks was up 47% from 2005.

NPD vice president Russ Crupnick sais “It is likely that the annual number of legal users will surpass P2P users in 2007” though he adds “Unfortunately for music labels, the volume of music files purchased legally is swamped by the sheer volume of files being traded illegally.”

The U.S. counted 47 million “digital music households” in 2006, consisting of at least one member who downloaded, ripped, burned, played or uploaded a song.

Nearly 13 million of them paid for a download, with the total number of paid downloads exceeding 500 million — a 56% jump from 2005.

Fifteen million digital music households downloaded a song from a file-sharing service in 2006 — an 8% increase, but a slower growth rate than prior years.

However, the estimated total number of P2P downloads was 5 billion in 2006, up from 3.4 billion in 2005.

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Digital music sees sales double

January 17, 2007

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Latest statistics on digital music shows sales have almost doubled to around $2bn in 2006, according to an industry report. The increase of about 10% of all sales, however, has not reached the music companies’ “holy grail” of offsetting the fall in CD sales.

The International Federation of the Phonographic Industry (IFPI) is confident and said digital sales could account for a quarter of all sales worldwide by 2010.

The IFPI’s 2007 Digital Music Report said consumers last year downloaded 795 million tracks, up 89% on 2005, from almost 500 legitimate online music services available in 40 countries.

Despite this overall music sales were down 4% in the first half of 2006.

IFPI chairman John Kennedy said: “The pace of transformation in our industry is breathtaking, but at the moment the holy grail is evading us. I would like to be announcing that a fall in CD sales is being compensated for by an equal or greater increase in online and mobile revenues. But that is not yet happening on a global basis.”

The number of tracks available for download doubled to reach over four million on leading services.

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US Album Sales Down in 2006 While Digital Music Rises

January 5, 2007

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Album sales in the United States dipped 4.9% last year, according to figures published by Nielsen Soundscan. The total tally, which includes CDs, digital album downloads, and LPs, moved to 588.2 million units for the period.

The downturn is part of a steady decline in album purchases, and follows a year-over-year dip of 7.2% recorded at the tail end of 2005. According to the figures, the highest-selling album for the year was the High School Musical soundtrack, which sold 3.72 million units. That falls below the 4 million threshold, part of a softening market for nosebleed blockbuster releases. Other yearly chart-toppers came from Carrie Underwood, Nickelback, Justin Timberlake, James Blunt, Hinder, and the Dixie Chicks.

Dragging the average down was a weaker-than-expected final week. After Christmas, sales reached 12.9 million units, a near-20% drop from year-ago figures.

The lackluster result came during a critical window, as sales traditionally bulge during the holidays. Predictably, the last six weeks of the year accounted for 20% of yearly returns. Meanwhile, physical album sales on the internet rose 19% to 29.4 million units for the year, while digital album downloads jumped 101 percent to 32.6 million units.

Most genres were down, though classical offered a rare bright spot by moving upward 22.5 percent to 19.5 million units.

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iTunes sales going down… or up?

December 15, 2006

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A recent iTunes Store sales analysis by Forrester Research is now drawing more scrutiny.

Apple immediately questioned the report, which declared that monthly sales levels had dipped 65 percent during the first half of this year. An Apple spokesperson called the figures “simply incorrect,” though the company did not offer its own sales data to counter the finding.

Others are now piling on. “Contrary to recent reports suggesting sales on iTunes are declining rapidly, our analysis of Apple company data … shows strong growth (year over year),” Piper Jaffray analyst Gene Munster wrote Wednesday.

A closer looks reveals that different data sets are being analyzed. Year-over-year paid download sales are increasing, and Nielsen Soundscan data suggests an increase of about 75 percent. But Forrester was actually examining sales shifts within the year, specifically the slide from January to June. “The 65 percent decline in revenue was between January 2006 and June 2006,” explained Forrester researcher Remy Fiorentino.

Meanwhile, lead analyst Josh Bernoff attempted to cool the flames and clarify the matter, especially following a dip in Apple earnings and endless phone calls. “Now for the record, iTunes sales are not collapsing,” Bernoff blogged. “Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it’s simply not possible to draw this conclusion.”

The Forrester report relied on a sampling of iTunes credit and debit card transactions, not Apple-supplied data.

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Digital Music Sales “Collapsing?”

December 13, 2006

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A recent report, from Forrester Research analyst Josh Bernoff, showed that sales at the leading DRM digital download service, Apple’s iTunes music store, dropped this year.

Secretive Apple doesn’t break out revenues from iTunes, but Forrester conducted an analysis of credit card transactions over a 27-month period. And this year’s numbers aren’t good.

While the iTunes service saw healthy growth for much of the period, since January the monthly revenue has fallen by 65 per cent, with the average transaction size falling 17 per cent. The previous spring’s rebound wasn’t repeated this year.

And it isn’t just Apple‘s problem. Nielsen Soundscan has grimmer news for prospective digital download services, indicating three consecutive quarters of flat or declining revenues for the sector as a whole.

Even though the figures don’t include gifts redeemed via the iTunes Store and Apple can argue this does not reflect the volume of transactions taking place, it gives a more accurate picture of what customers are actually prepared to pay for. His research shows that people who buy an iPod go on to purchase only about 20 to 23 songs at Apple’s online music store.

Yet the iTunes store is successful, selling more than 1.5 billion songs since its inception in 2003, making it the fourth largest music retailer in the country, said Natalie Kerris, a spokesperson for Apple. She added that nearly 70 million iPods have sold worldwide to date.

Aside from the issue of iTunes’ sales trend, Bernoff’s research spotlights a significant shift in how people are buying music online: they want singles more than albums. That trend is putting further pressure on overall music sales, which continue to drop steadily year after year.

He explained that with CD players, consumers continue to buy new CDs year after year. The expectation was when consumers bought an iPod they would continue to buy digital music at the same pace at iTunes. “That’s not happening.’’

The first-of-its-kind analysis of iTunes, by far the leading retailer of legal music downloads, shows that it “is not the engine that will restore the music business,’’ Bernoff said in an interview Tuesday. “There’s a problem here. CD sales have fallen 20 per cent over five years. The message here is not that CD sales are coming back, the ability to obtain pirated music is now so widespread the DRM looks to consumers more like a problem than a benefit. iTunes sales are not cutting into CD sales,” he added “they’re an incremental purchase at best.”

Bob Merlis, a long-time executive with Warner Bros. Records and now a Los Angeles-based music industry consultant, said the iTunes phenomenon of purchasing individual songs “is not healthy for the music industry.

“It doesn’t address something that albums and full CDs did, which is having a body of work from an artist,’’ he said. “It’s like going back to the ‘50s and ‘60s, before the album’’ gained traction, he said.

“It’s so fragmented now. You get the song you like but you don’t get to know the artist anymore. It encourages this rapid turnover,’’ he added, pointing out that a band like U2 achieved its popularity because fans came to know them through a substantial body of work.

“If U2 came along right now, would they have the staying power? It would be very difficult to maintain that ongoing interest,’’ Merlis said.

Nonetheless, despite overall declines in sales, digital music is a bright spot.

“This is a marketplace that went from nothing three years ago to already this year surpassing a billion dollars in retail value revenue,’’ Jonathan Lamy, senior vice president of communications at the RIAA, said in an e-mail. “That’s encouraging and will only continue to grow in the future.’’

At EMI Group, whose artists include newcomer James Blunt and R&B diva Beyonce, digital music sales grew by 68 percent for the first half of 2006, according to company figures. Digital revenues accounted for 8.5 percent of all sales, up from 5.4 percent a year ago.

Furthermore, 10 percent of sales for Coldplay’s “X&Y’’ album have been in the digital format. Of those sales, 35 percent have been by track and 65 percent were in album format. EMI called it good evidence that people do want full albums in digital formats.

On the other hand, 70 percent of digital sales for Gorillaz — another popular EMI artist — have been in track format and 30 percent in the album format. The information didn’t mention specific Gorillaz’ albums or songs.

Merlis said one way to get more from digital downloads is to offer more value for the consumer.

“In the album era, and with CDs, you get lyrics and nice packaging,’’ he said. “More value equals more consciousness by the audience that this is good. If it’s just a song, it’s not that compelling.’’

To that end, he noted that many digital downloads will start coming with lyrics, thanks to new agreements with record labels.

Gracenotes, which provides data such as song titles to digital download services including iTunes, will launch its lyric service early next year. The company has agreements with each major record label.

And one can always wonder: do the comparatively modest iTunes numbers suggest that consumers are still spending the bulk of their music budget $14-at-a-time on CDs?

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Online music sales rise in the UK

November 9, 2006

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Nielsen/NetRatings, the leading provider of Internet research, today reveals the type of audio and video content Britons online are consuming and how much they’re paying to do so.

The average Briton online currently spends £3 a month (£36 per year) on streaming / downloading audio and video content from the Internet. Whilst most of this spend (57%) is still devoted to audio content, video content already accounts for 43%. Men spend 40% more than women but it’s the young Brits who spend the most (£64 per year).

Alex Burmaster, European Internet Analyst, comments, “Three pounds per month might not seem much, after all it’s the equivalent of a DVD rental, a magazine, a pint of beer or almost four songs from iTunes. However, if you consider that there are around 26 million Britons online each month that’s a very healthy revenue source for websites producing audio and video content”.

He considers that this “represents an encouraging shift in the willingness of consumers to pay for online content that has mainly been available for free in the past. It took a while for consumers to come round to the idea of paying for audio content online”.

By now, around three-quarters of Britons online have listened to music via the Internet and over half have streamed music audio while over a third have already downloaded music.

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Over half of U.S. phone users want music

November 7, 2006

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Cingular Wireless estimates that over half of U.S. cell phone users want to listen to portable digital music, as the service provider launched options aimed at courting the demand.

Cingular, owned by AT&T Inc and BellSouth Corp., is offering alternatives to portable music leader Apple Computer Inc, by supporting rival music services such as Yahoo Inc. and Napster Inc.

The No. 1 U.S. mobile service sees new music services as a way to boost revenue by winning new customers and enticing current ones to stay.

Cingular and its rivals seek to encourage users to subscribe to wireless data services such as music and video features as prices for phone calls keep falling.

Jim Ryan, Cingular’s vice president of data services said that offering more music options to its 58.7 million subscribers could provoke more of them to start listening to music on the go.

“Of the people interested in listening to music (on the go) about five percent are actually doing it,” Ryan told Reuters in an interview, citing U.S. market research statistics. He added that more than 50 percent of people with cell phones today show some level of interest in music.

Music could turn out to be big opportunity for the wireless industry. There are more than 200 million cellular customers in the United States alone.

“How soon they adopt and what they adopt, we can’t say,” the executive said, noting that some music lovers would continue to favour dedicated music devices such as Apple’s popular iPod over music-playing cell phones.

Apple, which dominates the market for portable digital music players, is widely expected to start selling a music playing cell phone in 2007.

Ryan did not say whether Cingular, which currently sells three phone models that run Apple’s iTunes music software, would sell a cell phone from Apple. The companies’ relationship would evolve, he said.

Cingular customers will be able to put music from these services onto their cellphones by transferring the songs from their computer. Next year, customers will be able to download songs wirelessly directly to their handsets.

Ryan said Cingular customers would be able to access the music options on the Nokia N75 phone and one from Samsung Electronics Co Ltd.

Customers will be able to play music from any Web service including Yahoo and Napster that uses the Microsoft Corp music copy protection software.