Music Downloads Post Their Worst Decline EVER

Music Downloads: a Metaphor, If You Will

It’s official: 2016 is the year that killed music downloads.

Last month, sources pointed Digital Music News to double-digit declines in music download sales, with drops potentially exceeding 20 percent year-on-year.  But actual figures released early this morning show a sharper drop than imagined.  According to Nielsen Soundscan first-half figures, music downloads dropped an astounding 23.9%, with total sales landed at 404.9 million.

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The severe drop is the worst on record, and comes alongside breakneck gains in streaming.  Suddenly, debates over whether streaming is cannibalizing downloads are being thrown out the window, with the latter clearly devouring the former for breakfast, lunch, dinner, and a midnight snack.

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downloads < 0 ?

2016 is clearly the year that killed paid music downloads.  But unlike CDs and vinyl, which enjoyed post-extinction lifespans, the music download could be permanently wiped off the Earth.  Emmanuel Zunz, CEO of digital distributor ONErpm, was the first to predict a complete and total replacement of the paid download, simply because streaming is so directly competitive (and better).  “CDs aren’t going to go away completely, just as vinyl never went away completely,” Zunz told Digital Music News last month. “But I think downloads could potentially go away completely.”

Meanwhile, chatter continues to surround possible next steps at Apple, whose iTunes Store rules paid downloads.  In earlier, iPod-dominated times, Apple commanded an estimated 85 percent of all music download sales, with upstarts like Amazon claiming most of the remainder.  Fast-forward a half-decade, and music download are becoming a sag on a bloated iTunes application, with streaming partition Apple Music fighting with 99-cent downloads within the same application.

It’s a mess that’s generating serious churn (ie, unsubscribes) for Apple Music.  And it’s apparently prompting some serious soul-searching on the future of iTunes Music downloads, though Apple quickly denied a DMN report that downloads would be removed within 2-3 years.  Noted, though sources continue to point to serious iTunes revamps ahead, with several major developments on the downloads front, possibly this year.

That probably doesn’t include an upcoming iTunes interface upgrade, though 2017 is an entirely different question.

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Meanwhile, the blood is also flowing on download album sales, once a smaller, reliable mainstay for the industry.  That’s now changing in rude fashion: according to the Nielsen stats, paid album downloads tanked an additional 18.4% during the first half of 2016, with CDs showing a more modest 11.6% drop.  By sharp contrast, LPs (vinyl) posted a handsome 11.5% gain, with a growing link suspected between streaming and retro wax purchases.

More ahead.

 

 

17 Responses

  1. rikki

    as a dj of 25 years my take is like a baseball team you have 9 superstars on the field but the bench is all minor leaguers

    the vast amount pf pre-fabricated watered down pasteurized homogenized Mc Music today is astounding, and if they put so little effort into creating this, then why should i pay my hard earned money for it?

    Reply
      • Econ 101

        You really have to ask that question? Didn’t you supposedly study economics?

        It’s for the same reason more people eat at McDonalds than Spago. Why more people buy Toyotas than Porsche’s.

        There is a correlation between how much people are willing to pay for perceived quality which leads to differences in consumption levels.

        No one would say McDonalds is better than Spago. But millions of folks decide to eat at McDonalds because it is priced appropriately for them. Same with Toyotas.

        No surprise that overall music consumption is up as the price for access is declining.

        Next topic: “Scaling” revenues….

        Reply
  2. Nicky Knight

    Now before everyone panics I’ll give you my thoughts..

    The Paid Music Download is Not Dead Yet !!!

    A lot of consumers would rather buy and own an audio music file than rent a streams and be stuck on paying a monthly rental for the music.

    It’s true, most sales of paid music downloads are for singles and not albums .. but that’s ok.. it makes perfect sense to my way of thinking… you’re buying the songs/music that you like.. I think most people are more song orientated than being album orientated except for the diehard fans who’ll snap up the albums ,, probably more so in the physical form.. (CD/Vinyl)..

    I haven’t seen any tears flowing from the eyes of Max Martin lately.. there’s still money up in them there hills…

    The recorded music business is alive and if you make hits you’ll get rich !!

    I think it is a singles business and in a way it probably always was.. except in the US during the 80s/90s when the industry kind of forced people to buy albums as companies stopped releasing CD singles.

    Back in the 60s 70s when the 7″ 45rpm single was king – it was all about the single..

    Reply
  3. Remi Swierczek

    UMG suicide pill is super efficient in dissolving the business to streaming molasses!

    One the death doctors Mr. Francis Keeling has confirmed “mission accomplished” with his jump from dumbbell team to arsonists team!

    Very vibrant and eventful music nerd land.

    Reply
  4. KevinC

    Just reporting on a decline in numbers is a sheeple approach.

    When you sell dougnuts at a shop at a great price, all is good. Now if you put a dougnut stand outside that shop and charge people a low monthly fee for a “all you can eat” offer, and even have a free offer for tasters, what do you think will happen?

    People didn’t decide to move to streaming out of their own will, they were offered a deal that was lighter on their wallets, and when you do that, you will always move the masses to the cheaper deal. People only react to deals that is put in front of them. You limit the choice and you’ll get the desired effect. So you will start to see music download options decline to a point where the masses will just have to go with the streaming option.

    You can already see the push. In some countries where they had Apple sponsored top 40 charts, they now started to move to Apple Music streaming top 40 charts, forcing the masses to streaming.

    So don’t just report numbers. People are so quick to point out that numbers don’t lie, but they don’t understand that. Numbers do not lie because numbers say nothing, it is the writer that try to make that numbers say something.

    So free advice to you…declining numbers is NOT the story, it’s the effect of something else.

    Reply
    • Star E.

      Interesting. How is streaming lighter on the pockets? Isn’t easier and cheaper to just download a song here and there and pay when you feel like, rather than paying a monthly fee for random music? While there maybe a push for streaming in the industry, I think streaming is the consumers preference. The listening habits of consumers have changed. Streaming allows you the ability to enjoy music without making a real commitment and I think most people have become accustomed to this.

      Reply
    • Roger Bixley

      This analogy is flawed and silly because, unlike donuts, music is a durable good. You can’t buy a donut in the shop and eat the same donut over and over again.

      Reply
      • Anonymous Too

        Are you suggesting that if donuts were a durable good, consumers would choose to pay a higher cost per donut instead of taking the discounted all you can eat option? If the taste is identical, seems like the consumer would be unlikely to choose to pay more…. whether the product is durable or perishable.

        Reply
      • KevinC

        Nothing wrong with it, you just choose to focus on the wrong part. The idea of the analogy is to highlight same pattern of behaviour with a same set of circumstances using different products. Paying a low monthly to have access to a fckload of music is the same as owning them all. You have the equity title to all that music for as long you pay that low monthly fee.If you have to buy them all it would cost you a lot of money. It’s a no brainer, it’s a financial decision based on the options stuffed in the user’s face. And one of those options is FREE ACCESS TO MUSIC. People just vote with their wallet.

        Reply
    • Remi Swierczek

      STREAMING with even 500,000,000 subs can only deliver $15B in CASH.
      1999 CDs = today $57B!!!!!!

      STOP blinded by science NERDS NOW!

      Conversion of just Radio (100,000+ Radio stations on Earth) HAS TO DELIVER $100B music industry by 2020, and it would be only the beginning!

      We have $200B of annual music goodwill out there! Call me if you have access to L. Page at Google so we ca enlighten him and TRIPLE his Google on music!

      Reply
  5. Anonymous

    If we want to keep downloads as a viable source of revenue; then we need to get a company selling downloads that actually wants to increase their sales and give them the tools (publicity and licenses) to get the job done. The music download model has always been broken. Regardless of demand, the price almost never changes. While consumers may have accepted that as a fact, they are also proving unwilling to pay it. And why should they pay it? Why should they pay $1.29 for a digital track released in the 80’s? Or even worse, $1.79 for a HQ digital copy of the same song. The only thing we have proven over the years is we have no idea how to properly price music. If we did, the idea of paying $10 per month for life just to rent access to music would never have taken off.

    Reply
  6. Don Ho

    Download sales are down for MANY reasons:
    First, they cost Nearly as much (or MORE) than a physical format whether it is a CD OR VINYL.
    Second, Downloads, for the most part, don’t include the same amount of Liner Notes or artwork as their physical counterparts.
    Third, most download sites DO NOT offer a back up. It’s on you. your P.C. or storage crashes, you’d better have multiple backups. else-wise yer S.O.L.
    http://WWW.PONOSUCKS.COM

    Reply
  7. Nicky Knight

    iTunes paid music downloads is still viable and if you look at what the popular hits are selling on iTunes it will change your way of thinking.

    It’s still very common for hit music singles to sell 500,000 to 700,000 in the US market alone.

    The revenue share of 70% means there’s still a lot of money to be made from recorded music.

    A couple of hit singles on iTunes and you’re a millionaire..

    For people making niche not-so popular music then it’s slim pickings I’m afraid ..
    If you are motivated to get the right skills and steer the right project into the hit business then you’ll do very well from iTunes and it will feel like iTunes is your best friend.

    Reply
  8. phillipalbertcox

    Price plays a key part of the transition, but we cannot forget that the pace of digital distribution technology contributes significantly. The sense of “ownership” has become more fluid, as access to those favorite tracks doesn’t need to be local. Commitment of ownership is now driven by distribution to the music loving consumer, who now has a lot more options available around access to digital media.

    Streaming provides a commitment of “the moment”, but easily repeatable without having to physically download a file. Listen as much as we want, when we want and as frequently as we want. Choice, choice and more choice!

    Finally, the digital distribution options will continue to evolve and streaming is maturing quickly and allowing a very potent tool for the marketing arsenal for media companies.

    Reply

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