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A double premiere in the American music industry: digital sales comprised over half of 2011’s income, and total sales increased for the first time since 2004.
In its most recent report, the Recording Industry Association of America (RIAA) compared music sales in all available formats, from vinyl to downloads, and had a surprise conclusion: for the first time in history, digital sales overtook physical sales – also freefalling in 2011, by 7.7% – and brought a little over 50% of the 7 billion dollars the American music market made last year. Overall, digital and physical music sales increased by 0.2 percent in 2011 – marking the first increase since 2004 –, but the market remains at less than half of its 1999 peak.
Compared to 1999, the number of records sold (regardless of format) has decreased to half, and there is an obvious tendency for virtualization and the disappearance of physical formats.
Compared to 1999, the number of records sold (regardless of format) has dropped to half, and there is an obvious tendency for virtualization and the disappearance of physical formats. Online and satellite radio stations contributed a 17% increase last year, whereas sales of mp3s and ringtones to mobile platforms decreased by 38.5%.
Surprisingly, despite making up a mere 2% of the total market, vinyl sold three times as well as it did in 2010 (a percentile of 34.2), while CDs lost an additional 8.5% of their popularity. Slowly but surely, the music industry is coming around to the conclusion that its chance of survival in its current form, with only four major record companies controlling the game, is to adopt the internet as a distribution means and to instill loyalty in the buyers with collectible products. Dead media is becoming trendy, as physical music formats are turning into museum exhibits.
Streaming has become a market segment sought by both advertisers and companies. The beginning of the year was marked locally by the launch of Zonga – a service boasting a 15-million-titles catalogue –, and by Deezer entering the East-European market. Spotify, one of the biggest players in the paid-for services game, has no plans for Romania yet, but this hasn’t stopped anyone from making playlists on Grooveshark, which is visibly climbing Google Trends.
Profits generated by audio streaming subscriptions increased by 13.5% in 2011. Specifically, users listening from the cloud instead of their download folder paid 241 million dollars for the service.
As access to mobile internet spreads to smartphones and tablets, most users drop music downloads in favor of streaming. This has also been confirmed by the film industry, which estimates that in 2012 the number of streamed movies will double from 2011 – up to a total of 3.4 billion titles watched online. However, these predictions only cover paid services like Netflix or Amazon, and do not account for free sites like 1Channel.
Editor’s note: a big thank you goes to Crina Caliman who managed to translate our not quite easy to translate romanian article.