October 4, 2005
New Digital Sales Stats; Why Such a Long Face, Music Industry?
The RIAA frames the first half sales stats in doom and gloom.
Meanwhile, as is somewhat typical of their sister organization, the
IFPI is more upbeat about the global market. The data suggests a pretty positive trend: digital sales almost offset the downturn in CD sales during the first half of this year,
both domestically and globally. IFPI says that explicitly. Let’s run the numbers.
RIAA reports that total CD sales dropped $266.1 million.
Meanwhile, digital sales rose $124.5 million, but this number does not
appear to include subscription services. David Card projects
that subscription revenue will exceed $250 million, up from $150
million. I’ve seen a lot of different numbers on the labels share
of that revenue, particularly compared with CDs. Digital sales
royalties were set generally to mimic CDs,
so they may be comparable for subscriptions as well. Card suggests the
labels get a hefty share, and let’s assume, for the moment, that the
net revenue is comparable across the board. If we’re comparing
apples and apples with these gross revenue numbers, then the sales
decline was only $41.6 million. [Correction, 10/20: I
was looking back at this and realized that this estimate should
actually be $91.6 million, if one splits the projected $100 million
increase in subscription revenue over the course of the whole
year. So, the decline looks worse, but it’s still not as severe
as the CD sales numbers indicate.]
IFPI reports that global sales dropped $200 million, which includes the
digital gains. It suggests physical sales fell 6.3% to $12.4
billion, which means a decline of ~$833 million. Digital music
sales rose $570 million; “excluding the retail margin,” that was $440
million. That figure “includes sales from a-la-carte download
stores, music subscription
stores and from mobile music services such as downloads and ringtunes.
The figure does not include revenues from monophonic and polyphonic
ringtones.”
Here’s my take-away: we’re seeing some stabilization in sales, driven
in part by the online market. If they can ride out some more
losses in the short term, the online market’s current and projected
growth will continue to close the gap. The music industry as a
whole could be doing a lot more to close that gap faster. But,
overall, I think these are fairly positive signs.
The real cause for worry: Gwen Stefani’s “Hollaback Girl” is the first song to ever reach the one million online sales mark. Very disturbing.
Filed by Derek Slater at 12:34 pm under General news
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