It’s Official: Fewer People Are Buying Downloads (for the First Time In History)…

We first reported this a few days ago, based on preliminary data shared by a top-level industry executive.  Now, Nielsen Soundscan has officially revealed that a-la-carte, song downloads are declining in 2013, a potentially historic shift in format preference.

Our source pointed to a year-over-year, 3 percent decline.  The Soundscan stats, published by Billboard, showed a 2 percent decline as of March 15th.

Nielsen Soundscan Slide showing downloads from 2005-2013

The preliminary data we shared on album downloads also proved correct.  The Soundscan numbers indicate a single-digit, 9 percent year-on-year gain, sluggish compared to previous years.  Album sales are far smaller in absolute terms, which means smaller gains translate into bigger percentage gains.

This could be the year that everything changed.  Streaming is now booming, and everyone is getting into this game.  Everyone meaning: Amazon, Apple, Samsung, Spotify, Xbox, Muve, Deezer, Rdio, Rhapsody, and about ten others, which means tons of cash drop-shipped to the major labels and publishers, but not so much paid to individual artists and smaller rightsholders.  Downloads, on the other hand, produce far higher returns and near-complete levels of transparency.

There are reasons to remain calm.  Actually, Billboard journalist Glenn Peoples pointed to a brief, one percent drop in late 2010, a situation quickly reversed by the shutdown of Limewire.  And readers are currently debating the veracity of Soundscan stats, a longtime sore-spot for the data company.  For starters, the most recent Apple stats show massive iTunes gains, though that appears to lump (and disaggregate) album purchases.  Nielsen puts digital albums into a separate pile.

 

Written while listening to the soundtrack to The Walking Dead.

20 Responses

  1. Visitor

    a “projected” small drop in 1st qtr?

    hardly justifies the tabloid headline….

    lies, damn lies and statistics – though no doubt the riaa & bpi will seize on the headline 😉

    Reply
      • Casey

        Two words. Weak Economy.

        If I recall, Wal-Mart sales in February were a “Total Disaster”. Other retailers agreed. Now explain to me why iTunes and Amazon music stores, which are also retailers, would be immune to this. Because they sell music? I don’t think so. Everyone is hurting.

        Reply
          • Visitor

            we’ve had a weak economy for a while but we’ve only had spotify (in the us) for the past year or so…

          • Visitor

            It went active in mid 2011, yet sales managed to increase in 2012.

  2. REMatwork

    Streaming is now booming…. which means tons of cash drop-shipped to the major labels and publishers, but not so much paid to individual artists and smaller rightsholders. Downloads, on the other hand, produce far higher returns and near-complete levels of transparency.

    Excellent point.

    So get this. We are in the digital age when practically every keystroke is potentially transparent (with the right subpoena). But what do we find? Artists actually had more transparency from the old system of physical distribution plus ASCAP/BMI “number of credit” reports.

    What we at the Digital Content Exchange have recommended is a trusted third-party(ies) that resolves music in an out of all the streaming services so that everybody knows how much something was played.

    All your purchases, streaming subscriptions, library loans could be mapped to your account when you log in. Movies, books and games too. And you can sell used stuff too. Convenient? You bet. But in doing yourself a favor, you’ll also be doing your favorite artists a favor, because they wil now have complete transparency.

    Reply
    • R. Knight

      There is no trusted 3rd party because as the money starts to flow trust goes out the window.

      Reply
  3. @Lassial

    Thanks Paul,

    This explanation is the most credible thus far.

    Waiting eagerly for the next Apple quarterly report.

    Reply
  4. steveh

    With iTunes and Amazon mp3 there is a definite shift towards full digital album purchase away from individual track purchase.

    This is a very healthy development. I don’t believe it is properly represented in these figures that focus on “a la carte” song downloads (ie. individual track downloads).

    I think before reading too much of a trend here we ned to wait for Apple’s next figures. If one is going to read a lot into individual track download totals, then it’s wholly correct to “disaggregate” the rising full album sales and add these track numbers to the individually bought tracks, which will show a gain.

    Reply
  5. wallow-T

    My bet is on the macro-economic situation. The end of the Social Security/FICA payroll tax holiday on 1 January was felt as a permanent 2% pay cut, for everybody who makes less than about $125K. Gas went back up to the $4/gallon neighborhood, and “the sequester” has about a million well-paid government employees and contractors hoarding cash in anticipation of layoffs and furloughs. It’s rough times across most luxury retail sectors — a luxury is anything beyond food/shelter/transport/medical care.

    Note the stories about WalMart’s sales problem this year, someone else on DMN referenced that today.

    Reply
    • Visitor

      you do understand that historicially low ticket items (previously $20 albums) are recession proof… certainly 99 cents song would seem to have the same resilinace in the economy as chocolate bars…

      hershey’s stock price has been on the rise for 5 years… so, so much for the bad economy theory…

      http://www.google.com/finance?q=NYSE:HSY

      and then there’s this…

      http://thetrichordist.com/2012/10/05/mythbusting-music-is-too-expensive/

      check the chart… it’s not like there haven’t been recessions prior to 1999… and you’ll also note the lack of a massive spike during the economic boom of the housing market… hmmmm

      Reply
      • AnAmusedGeek

        One player in a sector doing well during a recession would tend to show that player has good sales/marketing people rather then the sector as a whole being ‘resilenant’. It would be much more interesting to see how the sector (candy) as a whole did.

        Also, I gotta question the whole $20-is-recession-proof theory.

        I play a lot of MMO games (‘entertainment’ and ‘luxury’ sector), historicially, these games are $15-20/month for unlimited access. However in the last few years, there has been a MASSIVE shift to free-to-play models with a cash shop for extras. A lot of the rationale for this was based on declining subscription numbers, and complaints that the subscriptions were ‘too expensive’. (note: cash shops generally generate MORE revenue then subscriptions, so the publishers actually came out ahead…So much for ‘too expensive’)

        Reply
        • Catherine Hol

          Yes, indeed … so many figures from the US, but who’s analyzing the worldwide data?

          Reply
  6. ETDAWG86

    Big album drop March 26th “I AM NOT A HUMAN BEING II”. Can’t wait to hear Lil Wayne drop those beats. Should be dance album of SUMMER 2013.

    MATTHEW 5:39

    Reply
  7. JTV Digital

    Would be interesting to see this analysis for worldwide sales.

    The trend would surely be different.

    —————————————

    http://www.jtvdigital.com

    worldwide digital music distribution

    Reply
  8. JTV Digital

    From the latest IFPI report

    “download sales increased by 12 per cent in 2012, to 4.3 billion units globally (combining digital singles and albums). digital album sales grew at more than twice the pace of single tracks. there were 2.3 billion single track downloads worldwide, an increase of 8 per cent and 207 million digital albums sold, up 17 per cent on 2011, showing consumer demand for albums remains strong.”

    Globally there was a 12% increase of download sales, which is not reflected on the above graph that is US-focused.

    ————————-

    http://www.jtvdigital.com

    worldwide digital music distribution

    Reply
  9. Beatsuite.com Music Library

    Streaming is popular, it’s great and people are paying for it. I wouldn’t purchase digital content. I do subscribe to a premium Spotify account for unlimited streaming and mobile functionality.

    Mark at Beatsuite.com Music Library

    Reply

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