Researcher Dissects CD Sales Decline, Highlights Retail Issues

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Aisles have been poorly populated at physical music retailers for years, part of a pronounced shift away from CD purchases.

The consumer migration, tame in previous periods, has suddenly accelerated this year, causing a fair amount of anxiety among retailers, labels and distributors. But what exactly is causing consumers to move so aggressively away from physical product?  One explanation is that consumers are simply rebelling against a heavily-bundled package, one that forces playlist order and less-desirable album cuts.   A highly related explanation is that digital files, and the iPods that house them, represent a far more convenient and satisfying listening experience, one that is more in-tune with music fans today.

Both are strong factors, though researcher NPD recently challenged their importance.  “Consumer rejection of the CD is not the cause of the current accelerated sales decline,” the group asserted during a recent presentation at the retail-focused NARM in Chicago last week.  According to the researcher, deficiencies at retailers are a major source of the problem.  The group noted that music consumers are usually discovering artists and songs outside of retail locations, a major missed opportunity.  That means far less impulse purchasing, a significant driver of record label revenues across various platforms.  According to the findings, just 13 percent of new music buyers make artist discoveries in retailers themselves, noticeably less than figures of 37 percent for traditional radio and 25 percent for personal recommendations.   The solution, according to NPD, is for retailers to return to being “champions of discovery,” a role that can be achieved by stronger selection, merchandising and promotion.  Meanwhile, the deletion of Tower Records from the retail landscape is also playing a role in the downturn, especially for consumers that have not replaced their once-trusty outlets.