Cumulative CD sales have dipped dramatically this year in the United States, a decline that is generating serious ripples for major labels and physical retailers. The industry insiders 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.
According to Nielsen Soundscan, CD sales have seen a decline of 20% this year. This is a huge blow for physical retailers who rely heavily on CD sales, and major labels who are struggling to make up for the loss. However, Nielsen Soundscan issued a counter message of growth on Thursday morning, stating that there have been 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.
While cumulative download sales have grown this year, 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. 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.
Industry insiders are trying to come up with ways to combat the decline in CD sales. Some have suggested that physical retailers should focus on selling merchandise and music memorabilia, while others believe that artists should focus on creating more exclusive content and experiences for fans. In any case, the decline in CD sales is a clear indication that the music industry is in a state of flux.
The rise of streaming services like Spotify and Apple Music has had a major impact on the music industry in recent years. While these services have helped to boost digital sales, they have also led to a decline in physical sales. Consumers are now able to access millions of songs for a relatively low monthly fee, which has led many to abandon the traditional model of purchasing CDs.
The decline in CD sales is also having an impact on independent record stores. Many of these stores rely heavily on CD sales, and are struggling to stay afloat in the current climate. Some have even had to close their doors for good.
In conclusion, CD sales have seen a significant decline this year in the United States. While digital sales have seen growth, they are not offsetting the loss of physical sales. Major labels and physical retailers are struggling to come up with ways to combat the decline, while independent record stores are feeling the impact. The music industry is in a state of flux, and it will be interesting to see how it adapts in the coming years.