Nielsen Soundscan Spins First Quarter CD Sales Declines

Cumulative CD sales have dipped a dramatic 20 percent this year in the United States, a decline that is generating serious ripples for major labels and physical retailers.

Industry executives have been watching the action closely, though a recent Wall Street Journal examination of the issue on Wednesday broadened awareness considerably.  That has already sparked coverage from other outlets, and promises to stir a reaction among investors and consumers alike.  The Wall Street Journal quoted figures from Nielsen Soundscan, though the tracking group issued a curious counter-message of growth on Thursday morning.  In the media release, Nielsen pointed to “more individual music purchases than ever in its history,” and strong increases in sales of digital assets.  Specifically, the group noted that “Overall Consumer Music Purchase Decisions” have risen 19 percent this year, thanks to increased a-la-carte downloads.  “Consumers have made more than 46 million additional music purchase decisions this year than last year,” the group stated.

Cumulative download sales have grown this year, though a quick back-of-the-envelope calculation reveals that digital gains are not offsetting physical declines.  That realization is helping to deflate stocks of major labels like Warner Music Group, which is currently dragging at near-52 week lows.  Meanwhile, the Nielsen release also recalculates the decline by using a concept called “Track Equivalent Albums,” which counts ten, a-la-carte purchases as an album purchase.  Using that measurement, cumulative yearly declines are a more modest 10 percent, though critics note that the recalculation hides a drastic decline in bundled purchases.  That places enormous volume pressures on digital sales volumes, which so far have been lower-than-expected.  The Nielsen Soundscan release includes weekly data through March 18th.