Going, Going, Not Yet Gone: CD Sales Drop Accelerating
by Peter Kafka
Posted on November 4, 2008 at 5:44 AM PT
I’m pretty sure I haven’t bought a CD in 2008, and I don’t know anyone else who has, either. Which is why retailers like Wal-Mart (WMT) and Best Buy (BBY) are devoting less and less space to the discs, which means sales are dropping faster and faster. Here’s an update from Pali Research’s Rich Greenfield:
The first four weeks of Q4 2008 have seen CD sales fall about 23% in total (down 26% excluding last week’s AC/DC exclusive that did not benefit the major record labels, nor retailers beyond Wal Mart), compared to the 16%-18% declines experienced during the first three quarters of 2008 and last year’s full-year decline of 19%.”
The accelerating rate of decline for CDs combined with the slowing growth of digital unit sales has resulted in Q4 total unit sales declining 11.6% compared to the 5%-7% declines experienced in Q1-Q3 2008 and is similar to the 11.3% decline experienced in Q4 2007.”
Those are the kinds of stats that make it easy for even the most slothful armchair analysts to declare the CD dead. And they’ll be right–one day.
Even after CD sales shrink by double-digits again this year, it’s going to remain a big business. Last year the music labels shipped some $7.4 billion worth of discs in the U.S. alone. Question. Who is buying these things?
[Image Credit: Neil Rickards]
Comments
The hostility of the RIAA and music labels to consumers is the driving force here. I’m so sick of their attacking innocent people, and attacking those who are guilty with disproportionate penalties (people convicted of manslaughter can get smaller fines) has stopped me from buying most CDs new.
I buy most of my CDs used at Amazon. Why? Better quality than downloads, and a hard copy. But the labels don’t get my money. If artists would create websites to collect royalties from people like me, I’d send them double what the labels pay them for the sale of the CD new. And I’d still save money!
Posted by Eric Welch at November 4th, 2008 at 8:11 amThanks Eric. But I think that the majority of people who aren’t buying CDs aren’t doing it because they’re mad at the RIAA or Big Music or because they’re concerned that artists aren’t getting their royalties. I think they’re not buying CDs because they’re getting music for free, or because they’re just buying individual songs. The trick is for the industry to adapt to that reality, and it’s proving very difficult.
Posted by Peter Kafka at November 4th, 2008 at 9:16 amI’ve bought multiple CDs this year — and I haven’t only used trade-in money to do so (I get about 75 CDs in the mail a week). Generally I like buying from artists if I can, although that isn’t always possible. I also spend money on downloads.
Posted by maura johnston at November 4th, 2008 at 9:33 amI too have bought many CDs this year. Some at record stores, most at merch tables at concerts. It’s hardly a dead format (especially for independent musicians) but Wal-Mart and Circuit City are certainly taking it down a few pegs.
Labels are all to aware of their reality, and as Peter said it is difficult to adapt. CD and album revenue is being replaced by digital tracks, the occasional ringtone and (currently) meaningless advertising revenue sharing. The rise of the 360 contract is evidence of this awareness. The eventual rise of ISP-based subscription models and bulk purchasing (tracks on Dell computers, loads of content stuffed onto a slotMusic card) show an improved realization that old ways of selling music (album at a time, track at a time) won’t cut it.
Posted by Glenn Peoples at November 4th, 2008 at 12:34 pm