Year-to-date, sales of digital music tracks in the US have declined 3 percent, and digital album growth is also slowing. From a consumer perspective, the truth is that this market has been mature for several years, as the percent of the buying population hasn’t grown much since 2010. What increases there have been came from buyers shopping for more tracks, and trading up to albums. Except now that the trend has actually turned down, a bit of panic is setting in. With CD sales continuing to erode, and with music streaming in an early phase of monetization, the music industry can’t also afford a blow to music download sales.
I’m predicting that they won’t have to — at least not in 2013. In fact, I’d forecast increased download sales this calendar year, continuing into January 2014, when redemptions of gift cards occur. To reach that conclusion, we need to back up a bit and examine the popular reasons for softening download sales.
Here are just a few . . .
- As digital music migrates from iPods to phones and tablets, there is more potential for distraction. Consumers might play a mobile game or watch a video, rather than listen to music. This is one of my pet theories – and there’s plenty of data showing music buyers’ attention getting diverted by other entertainment options. Overall, there has been a decline in consumers listening to digital files on dedicated music players.
- I’ve heard the theory that Android growth is moving potential iTunes buyers to other platforms. This view might have some merit, but NPD’s recent iTunes 2013 Consumer Usage & Market Dynamics Report showed that the number of iTunes users in the US reached 67 million in 2013, which is an increase of 34 percent over the past two years. Although it now shares primacy with apps, music remains an important part of the iTunes ecosystem. Gift cards are the most popular payment option for iTunes; and, when asked how they’d spend $25 from a card, iTunes users heavily prefer music to video, books, or even apps.
- Music listeners who stream aren’t buying music anymore, or they are buying less. With an expanding base of streaming services, why does a Pandora or Spotify or iHeartRadio listener need to buy music? And won’t iTunes Radio exacerbate the shift from owning to listening? Based on NPD’s Annual Music Study, Pandora and Spotify users are actually much heavier buyers of CDs and digital downloads, compared to other Internet users in the US In fact, that same study showed a 5 percent increase in download purchasing among Pandora buyers between 2011 and 2012 — when Pandora experienced significant growth. There is some evidence that this trend may not be holding, as unit-download volume among Pandora listeners declined 3 percent, according to NPD’s mid-year Music Acquisition Monitor; and Spotify listeners showed a similar trend. Despite those declines, I’m not totally buying into the “substitution” argument . . . at least not yet.
So what’s the problem? I’ll go out on a limb and blame the music. It’s the music that started the trend, and it’s the music that will reverse the trend. I’m not claiming to be a music critic, but a look at the mid-year Billboard chart suggested to me that things have been a bit quiet on the “hits” front, especially 2013 releases from mainstream Top 40 or pop artists.
Granted Justin Timberlake is in the Top 50 list, but Bruno Mars, Pink, and Maroon 5 only make the list on the strength of their 2012 releases. Kanye West and Daft Punk were #1s from the Top 50 list in 2013. I’d be the last fellow to insult Mr. West, but he and Daft Punk aren’t exactly Top 40-type artists. Although there were a few country artists who topped the list, it’s unlikely they’d be as popular as Taylor Swift on iTunes. This isn’t a scientific analysis of the charts, but perhaps just confirmation of a feeling that a few of the really major artists were on the sidelines early this year, at least from a release perspective.
What makes me think things will change? Look at the top sellers on iTunes today: Lady Gaga, Miley Cyrus, Katy Perry, Justin Bieber, Eminem, and Pearl Jam. Couple those artists with new and expected releases from McCartney, Drake, Justin Timberlake (Part II), Kelly Clarkson, One Direction, J Lo, Britney, Arcade Fire, Celine Dion, and even Cher. If all that music doesn’t lift download sales, I’ll eat my “Thumbs Up Pandora” button.
P.S. For all of you skeptics out there, I’m not suggesting that our attention-deficit economy, or apps, or streaming won’t eventually dull download sales. I’m just saying it’s not going to happen this year.