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Download Sales Are Already Down 13.3 Percent In 2014…

Look’s like last year’s declining digital download trend is going to continue… Billboard has reported first quarter Nielsen SoundScan numbers. Surprise to no one, on-demand streaming continues to rise, eating into sales.

Keep in mind that 2013 was the first year that digital download sales ever declined

Now, in this first quarter digital sales have gone down another 13.3 percent.

Digital track sales are down 12.5 percent, from 356.5 million to 312 million. Digital album sales went down 14.2 percent, from 32.4 million to 27.8 million.

CD sales have even higher losses: they’re down 20.5 percent from last year’s first quarter, from 40.1 million units to 31.9 million.

The EDM bubble hasn’t burst yet… Electronica was the only genre to see an increase in sales, going up 2.7 percent, from 1.32 million units to 1.45 million.  Jazz went down 8.5 percent, classical went down 33.3 percent, pop was down 28.6 percent, and Latin went down 21 percent.  Rock, r&b, country, and christian/gospel all went down 16-19 percent.

So, what do on-demand streaming numbers look like?

*Drumroll please*

There were 34.28 billion on-demand song and video streams in the first quarter, up from 25.44 billion streams in the first quarter of 2013.  This is a 34.7 percent rise.

Nielsen data says the average royalty rate per stream is $0.005, whereas last year’s first quarter average was $0.00375. This is a 33.3 percent rise.

Streaming royalties supposedly make up for the decline in digital sales, but that still doesn’t account for the decline in physical sales.

All types of music retailers are reflecting this loss. Chain stores, mass merchants, independent record stores, non-traditional retailers, and digital download stores all saw a decrease in sales.

 

When Nina Ulloa isn’t writing for DMN she’s usually reviewing music or at a show. Follow her on Twitter.

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Comments (38)
  1. Anonymous

    “Streaming royalties supposedly make up for the decline in digital sales, but that still doesn’t account for the decline in physical sales.”

    Here’s a little experiment everybody can do at home:

    Let’s say internet piracy became popular a second ago. In that second, the music industry was cut down by 50%. Which means 50% less money to spend on professional music production.

    What do you think the industry looks like a minute from now?


    Reply
    1. Nina Ulloa

      well this is a theoretical model that assumes everything is directly correlated nicely, so idk


      Reply
      1. Anonymous

        Theoretical model? :)

        So you believe there are other reasons for the 50% drop since Napster than piracy?

        Care to share which? Try to be as specific as possible. Bear in mind that we consume more music today than ever before.

        Or perhaps you think that professional music production is, like, financed by some kind of magical entities that are not related to the music industry and therefore not affected by its decline?


        Reply
    2. Find a different excuse

      For years, “Piracy” has been the excuse de jure of people that can’t sell music. I have not bought a CD in a store in years, and I have never pirated music, so the 100% decrease in my purchases is NOT due to piracy. And there are millions like me. Losses due to “Piracy” do not decrease sales unless the person pirating the object would have otherwise bought the item. Please provide the evidence that shows “piracy” replaced an actual sale.


      Reply
      1. Anonymous

        “Losses due to “Piracy” do not decrease sales unless the person pirating the object would have otherwise bought the item”

        EU lost 10 billion Euros and 185,000 jobs in 2008 because of piracy.
        Source: Unesco (I’ll post the link in a comment below; it takes hours to get through DMN’s spam filter).

        The US lost 58 billion dollars and 373,000 jobs in 2007 because of piracy.
        Source:
        Siwek, Stephen E.,The True Cost of Piracy to the U.S. Economy, report for the Institute for Policy Innovation, Oct. 2007.


        Reply
          1. Anon

            Dullard
            That report is mainly about pirated goods like handbags, shoes and clothes and not about music specifically.
            Not that this ever stopped fanatics from dragging it out of the closet every time they want to prove a point and have no real reference data.


            Reply
      2. GGG

        “Losses due to “Piracy” do not decrease sales unless the person pirating the object would have otherwise bought the item.”

        I’ve argued this idea in another context, so I do agree it’s not 1 for 1, but it’s kind of ridiculous to say piracy didn’t cause a loss to sales. One could make all sorts of arguments about why piracy happened, excessive CD sales in the 90s due to replacing vinyl and lack of choice, etc, but it doesn’t really matter for the sake of numbers. You can’t look at such a drastic drop in music sales over the last decade+ and not think piracy as anything to do with it.


        Reply
        1. find a different excuse

          The Unesco and other studies cited include more than music. They also assume a person who bought a $50 knock-off Louis Vuitton bag would have bought the same bag from LV for $1,900 but for the existence of the $50 knock off bag. That’s a stretch.

          “Piracy” is an excuse that people that can’t sell music use to justify keeping their job in the face of declining sales. “It’s not my fault I didn’t make my numbers, everything is available for free.” Every successful company has effective sales people because they fire the ineffective. The reverse happened in the labels for a decade. Anybody that knew how to sell either left (because his company was purchased during consolidation), or were pushed out because he was too expensive (and music sold itself so why pay somebody to do it).

          From 1997 to now, sales revenue from pay phones decreased by 98%, must have been piracy.


          Reply
          1. GGG

            Your sarcastic pay phone example ruins your entire argument because that’s a clear cut example of something better, from the consumer stand point, popping up; i.e. cell phones.

            What is better than $10-20 music for a consumer than that same music for free?


            Reply
            1. find a different excuse

              On the contrary, the example shows that a decline in sales during the same period, 1997(Napster)-to-current, does not necessarily mean that “piracy” caused the decline. There is obviously another explanation. I believe the same is true with declining music sales during that period. There was a lot more than piracy going on during that period that was hurting sales, including the invention and adoption of “something better” (aka new ways of listening to music that did not require using a CD player).

              Your conclusion that the availability of music for “free” was the “something better” that happened, is NOT my conclusion. Music has always been available for “free” to the consumer (e.g. radio). The something better I am referring to is physical format-less music playing devices. Now that labels are starting to see how those new devices/platforms/networks can monetize music, there are countless new ways to generate revenue. Fortunately, there are more and more people getting creative on how to mine those new sources.

              There will be countless other revenue sources discovered by people that focus on selling, instead of worrying about piracy. The telecommunications industry is much bigger today then when the payphone and long distance provided most of their revenue, just like the music industry will be without the CD and vinyl record as the primary source of revenue.


              Reply
              1. GGG

                I’m not saying piracy is/was the ONLY reason for declined sales or that we shouldn’t focus energy on fixing it; that’s 90% of my arguments on here, making fun of the people who do nothing but moan about everything.

                But I’m arguing the fact that you seem to think piracy’s effect is so negligible to not even be mentioned, which is just flat out stupid.

                But whatever, we’re on the same page for 95% of the time so no use continuing this.


                Reply
    3. Versus

      Agreed. Piracy is still the main problem for music. How is that other illegal activities are so successfully stopped on the Internet, but not piracy?


      Reply
      1. find a+different+excuse

        No it’s not. The main problem in music right now is that there are still people looking for excuses for why they can’t sell their music instead of finding ways to sell it. (Fortunately, the affliction affects far fewer people in the industry than it did five years ago.) Piracy and theft is present in every industry. Focus on what works and do more of it. Most labels are doing just that.


        Reply
        1. Anonymous

          Dude give it a rest, nobody even remotely connected to or informed about the industry takes you seriously.


          Reply
        2. Kris

          Are you kidding or something with that statement that Artists should stop complaining and find what works instead of blaming the lack of sales ofntheir music? Whow, that’s an extremely igignorant statement and being a Music Producer/Composer seeing many lose jobs because the ignorance only amplifies daily on the basic understandings that if people do not purchase a tangible product like a cd or a digital product like a mp3 then a lot of artist’s can’t eat. Why many ignorant people will ask, well that’s because of the obvious…shows/concerts etc. Don’t work if an artist isn’t known already and has developed a following and even when they believe thry have a following most who seem to be following them have extremely short attention spands oppose to individuals a few decades ago. The overall music available is overwhelming compared to 20 years ago now that most can record in their homes with basic non expensive digital recording equipment. If it was easy to make money in the music biz it would of been done already but the obvious factors of supply and demand come into affect.


          Reply
    4. Kurt Larson

      The quality of the music itself is probably not much affected by the degree of expenditure. One can make professional-sounding albums in one’s home now, if one has good songwriting and talent, and the cost of those doesn’t change much. What has mostly changed cost-wise is the decline in money spent on studio fees and marketing. The big money now (in *making* music) goes to talent. (Production, engineering, performing) (And that is as it should be) Changes in the money spent on marketing greatly change the nature of the business, but do not, IMO, change the core quality of the recordings, the songwriting or the performances.


      Reply
  2. Anonymous

    Here’s a great story about the new STAY DOWN initiative that may close the infamous DMCA loop-hole:

    http://www.huffingtonpost.com/william-buckley-jr/online-piracy-finally-in-_b_5086820.html

    “Copyright holders and administrators, while still responsible for policing their work, are only responsible for notifying a website operator one time. Once that is accomplished, the hosting site is now responsible for blocking the infringing content. A process that can be managed by software programs. If a service provider fails to comply they are in violation of the law.”


    Reply
    1. Versus

      That’s a step in the right direction. It still offers not compensation to the intellectual property owner for revenues already lost via piracy before the takedown, nor does it penalize the violating site. There needs to be a fine structure and compensation structure. Violators of copyright have to feel there is a real cost to their irresponsible actions.


      Reply
      1. Anonymous

        “Violators of copyright have to feel there is a real cost to their irresponsible actions.”

        Absolutely true. It’s just a start.

        Still, it’ll make a huge difference if Google finally has to close its portal to organized copyright crime.


        Reply
  3. TuneHunter

    Brilliant transition to streaming ashes.

    Video games doubled since 2000 – will go over 100 billion next year.
    Books and e-books holding nicely just few single digit drops in the past.
    Hollywood with movies not so brilliant with attendance but with almost record revenues.

    In media activities music industry is the lonely self made VICTIM that managed to shrink from 40 billion
    (56B in todays dollars) to just 15 billion.

    Your news for Q1 shows that 2014 might bring another year of overall shrinking.

    Streaming has to be interlocked with music discovery and music ID services.
    Discovery moment monetization will bring happiness to streamers and creators.
    100 billion global industry by 2020 should be our goal!


    Reply
  4. Rhapsody

    ——“Streaming royalties supposedly make up for the decline in digital sales, but that still doesn’t account for the decline in physical sales.”—–

    Next time, please makes a more accurate picture. According to Billboard,

    However, digital interactive streaming — not including passive streams from services like Pandora, iTunes Radio and Sirius — appears to be making up the slack, on a revenue basis at least.

    The growth in Pandora, Itunes Radio, Sirius, iheartradio could make up the physical shortfall. We will see when RIAA release the number for 2014.

    p.s. here’s the report for RIAA 2013 that Digital Music News have been ignoring:

    76.74.24.142/2463566A-FF96-E0CA-2766-72779A364D01.pdf

    2012:

    Streaming Revenue: $1.0328 billion USD (up 59%)
    Singles Download Revenue: $1.623.6 billion USD (up 6.7%)
    Album Download Revenue: $1.205 billion USD
    CD (physical): $2.4856 billion USD

    2013:

    Streaming Revenue: $1.439 billion USD (up 39.3%)
    Singles Download Revenue: $1.569 billion USD (down 3.4%)
    Album Download Revenue: $1.234 billion USD (up 2.4%)
    CD (physical): $2.1235 (down 14.6%)


    Reply
    1. Faza (TCM)

      Remember how everyone was looking out for the moment when digital sales would start making up the shortfall in physical sales over the past decade? That hasn’t happened, has it?

      It’s even less likely to happen with streaming, for much the same reasons.

      At this point there are about 100 million internet-connected households in the U.S (this is a derived figure from the numbers here). In order for them to generate revenue comparable with the pre-Napster peak (around $50 billion, value adjusted), each of them would have to spend $500 a year on streaming – over four times the current premium rate, which is already seen as too high. Present-day family plans tend to hover around $15 IIRC, giving us a mere $180 p.a – with a maximum revenue of around $18 billion, if everyone signs up for streaming.

      It seems highly unlikely that streaming will ever reach 100% penetration and it’s even less likely that it would do so at $40 per month. It is, in fact, rather likely that the price of streaming will go down as the various competing companies undercut each other to secure market share and increase their valuations. The probable result of all of this is that streaming will indeed become the dominant revenue source of the music industry – that will be a withered husk of itself, even more so than today.


      Reply
  5. Veteran - US MUSIC INDUSTRY 1970-today

    no surprise to me.

    We will not stop recording music. We will not stop manufacturing recording equip that’s affordable. Pros will continue to invest in studio equip and space. The prices are not falling – but more and more adequate “engineers” are making better and better use of modern recording technologies.

    “Radio” will not go away. We have been supplying the public with free music since the 1920s, and that won’t stop. It will only move from AM/FM to TV and Internet. Therefore, streaming online is analogous to AM/FM broadcasting .. with better reach. In 30 yrs, there will be no AM/FM.

    I just went and looked at new cars. No cd player. I just bought a new, very expensive, laptop. No cd player.

    I recently learned from a group of some 30 local musicians and future industry types age 18-34, that I was invited to speak to, that they predominately listen to local broadcast radio, and streaming via Pandora (not one person even mentioned Spotify).

    #thefutureisbright


    Reply
    1. Versus

      Studios are closing everywhere. Less and less musicians are able to make a living from their work. How exactly is this future bright?


      Reply
      1. Anonymous

        Yes, that’s the result of piracy. But nobody cares if musicians can make a living from their work. It doesn’t matter.

        Music matters.

        So let’s focus on the consequences for music. Who will finance professional music production in 2024?


        Reply
  6. jw

    Can we just set back for a moment & take a look at the merits of the mp3 format?

    Fidelity: Less than premium streaming, far less than CD, worlds less than 24-bit audio or vinyl.

    Packaging: None.

    Metadata: Only the bare minimum, no chance of medata (credits, liner notes, etc) being added to your files in the future. Abstracted from the store, no information like band biography, band discography, related artists, etc.

    Convenience: More convenient than a CD or vinyl, far less than streaming. A little more convenient than HD audio.

    Price: For what you get, certainly not worth the investment compared to CD or Vinyl. For the price of 10 mp3s per month you can have access to tens of millions of better quality, more convenient streaming songs. Even for free streaming gives you access to a better product.

    Sharability: Superior to hard formats & hd audio, but inferior to YouTube. Technically superior to streaming only as streaming is niche, though the streaming format is inherently much more sharable.

    MP3s took hold because, despite their shortcomings, their convenience was unlike anything consumers had ever experienced. The format itself was born out of the bandwidth & storage limitations of more than a decade & a half ago. It’s outdated technology. It’s no longer novel. It hasn’t been cutting edge for years now. It no longer leads a single relevant category, & in many important categories it sits dead last. It’s a format that only makes sense to Apple/record labels/artists, & you can’t rely on a product like that. Mp3s were a short term solution, & I find it to be insane that the bottom didn’t fall out years & years ago. The format just doesn’t make sense to the consumer.

    There’s no chance of this trend reversing… digital downloads will evolve into the niche Pono-style HD audio downloads, but even that will eventually become a streaming format. Otherwise consumers will move on to streaming. HD audio will be a niche streaming service at first, but will give way to tiered subscription plans when companies like Apple & Spotify acquire niche companies like Pono & HDTracks.

    But this is all good news, as mainstream streaming has the potential to generate much more money for the industry than mp3 downloads. Streaming, at scale, is what the industry should be looking forward to. The sooner the industry makes the switch, the sooner the industry will recover. If growth in streaming offsets the drop in digital sales, allowing for a smooth-ish transition, well whatever. But I’m much more of a “let’s go ahead & rip the band-aid (no pun intended) off right now” type of guy. If that had been done a long time ago, the industry would be in a much better place right now.


    Reply
  7. Jaded Industry Dude

    OH HAI GUYS HAI HAI CAN I ARGUE WITH YOU ALL ABOUT PIRACY TOO? I’M NOT AT ALL TIRED OF BEATING THIS DEAD HORSE OF A TOPIC :D

    All of you tards are so certain you know that piracy did or didn’t kill the music industry – Cool – Gotcha – I have my own opinion too about it but I’m sick and f*cking tired of this circlejerk. Stop arguing and start solving.


    Reply
    1. GGG

      Thanks for this, we were all wondering what you thought.


      Reply
      1. Anonymous

        :)


        Reply
        1. Jaded Industry+Dude

          :D :D


          Reply
  8. Endoftheline

    Um… I was just wondering… will cassettes make a big comeback anytime soon?


    Reply
  9. Sa

    I say this is GREATTT! thing –
    The crooked, amoral, stupid people makers known as the music industry deserves to starve for the ills they’ve been allowed to commit to the pockets of artists and the minds of the youth for decades. This is karma. Let the church say Amen! (lol@deyass)


    Reply
  10. Vic

    People tend to ignore the fact that there are so many used CD stores these days especiallly online stores like Ebay, amazon, and countless other (even forum) where people sell USED CD/Vinyl etc. If you think about it, a million transaction like that, it does NOT count on the soundscan because it’s USED stuff but people still buy physical copies, they just dont always buy it NEW most of the time anymore because with online shop like Ebay and Amazon, people could get used Cds with cheaper price.


    Reply
  11. Brad Reynolds

    Seriously……can anyone actually stay on topic…..?!

    The main point here is: The sudden uprise of streaming has put the music industry on a fast decline to it’s death. It’s pretty simple people, musicians used to get 70c for a download and now they get 0.005c for a stream.
    The maths is fairly simple. Reporting figures like “Streaming Revenue: $1.0328 billion USD (up 59%)” quickly lead people astray thinking that streaming is adding money to the pockets of mucisians. Here’s the news everyone ITS THE PEOPLE AT SPOTIFY GETTING THE MONEY NOT MUSICIANS!!!!

    How could it be any clearer????? I will repeat:

    musicians used to get 70c for a download and now they get 0.005c for a stream.
    musicians used to get 70c for a download and now they get 0.005c for a stream.
    musicians used to get 70c for a download and now they get 0.005c for a stream.
    musicians used to get 70c for a download and now they get 0.005c for a stream.

    Do we want new music or not???


    Reply
    1. Kris

      Exactly…pocket change doesn’t help an artist eat especially when the decimal point has been moved on their money. Earning $0.00005/stream is a joke because with basic mathematics if you multiple that number by 1, 000, 000 streams it only equals $50..how is an artist going to live on that? Even Clear Channel radio royalties@ $0.091/spins with the same amount of plays/spins would earn that artist $91, 000 (even if that is broken down between the Songwriter & Music Producer they earn $45, 500 each but able to live off of those spins)

      But Spofity is a complete joke because the chances of even Major recording artist’s in these times of overwhelming oversaturated musoc industry there’s way to much music to listen too. Remember, Major Record labels spend $250, 000 to $500, 000 for marketing/promotions so…what happens to the indie artist’s or the unsig ed ambitious new talent when they see this occurring? WHAT gives them Encouragement to continue in music? The destruction has already occurred which is why there’s currently lesser you ger artist’s involved these days.


      Reply
  12. CD and Vinyl enthusiast

    It’s all very well streaming music, but Spotify and others will only keep a particular track on their website for as long as it generates a profit for their selves! When a track (especially the more obscure ones) loses popularity, its revenue from sales will one day be less than the cost on storing it on the web host. In that case Spotify or others will then delete said tracks, resulting in them becoming unavailable for streaming anymore. This is where CD’s and records will have the advantage, as, being a stable format, they will always be available to be listened to in the decades to come. Even download files (like any other magnetic format such as tapes etc.) are not immune from corruption, so if you want to listen to some of the less well-known music from your childhood (as a small number of us like to do) you will still need to store it on some kind of archival format for future listening! So what better choice is there than to buy either shellac, vinyl, CD’s , DVD’s or Blu-Ray in the first place?????


    Reply
  13. Retired Industry Dude

    Wow. Heads in sand still after all this time. I went to a conference in 2000 (ish) – in fact I was a speaker – where the music label heads and big managers were complaining about digital and I remember being shouted down by the manager of a well established ‘Supergroup’ when I suggested abandoning the old copyright business model…they nearly burnt me at the stake.

    Making a living as a musician the likes of which were seen in the 70’s, 80’s, (early) 90’s is over and nobody cares nor should they. The writing has been on the wall for 20 years. If you’re a musician and you’re playing or writing because you love it…continue by all means but don’t expect to pay your mortgage with it. The world changes. Newcastle used to be a coal mining center. Manchester used to be full of cotton barons. Music Industry has changed and it largely has itself to blame for not embracing digital when it had the chance…too late now. Streaming, great for the consumer not so great for the band. Formats are sonically inferior to everything that has gone before – but people don’t care they just want to listen to stuff for free or almost free.

    Boy am I glad I made my millions before digital denial infected the music industry.

    People will happily pay $3.50 for a cup of coffee but don’t want to pay $1 for a music track when they can get it for free somewhere. Why? Because they don’t see the value, and they are the consumers so maybe they are right – the music industry spent a lot of years taking advantage of them with the cost of CD’s…so maybe it is time they got payback.
    It’s over people, and like I said… nobody cares.

    OK..back to lie by the pool.


    Reply

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