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BizReport : Trends & Ideas archives : March 18, 2009

The NPD Group: Marked increase in digital music sales

Cost-effectiveness and convenience is contributing the demise of the CD and a rise in digital music sales, according to new research from The NPD Group.

by Helen Leggatt

Last year saw a dramatic drop in the number of CD buyers, compared to 2007, according to NPD's annual Digital Music Study. While the number of Internet users paying for digital music rose by over 8 million to 36 million, and purchases of digital music downloads rose by 29%, sales of CDs fell 19%. NPD found the biggest drop in CD sales was among teens and those ages 50 and older.

Not all CD sales were lost to the Internet. The report notes that the total number of music buyers was down as consumers kept a close eye on their wallets, a symptom of the down economy.

Also apparent from the study was that many of the 4,000 people surveyed were looking to digital downloads as a means to purchase single tracks, rather than having to purchase an entire album - a double-whammy of cost saving and convenience.

"The trends we're seeing in our consumer tracking studies are evidence of the continued transformation of the music industry," said Russ Crupnick, NPD's entertainment industry analyst. "Just as music piracy and the advent of digital music ended the primacy of the CD, we are beginning to see new forms of listening challenge the practice of paying for music."

"The music industry now has to redouble efforts to intercept and engage these listeners, so they can create revenue through up-selling music, videos, concert tickets and related merchandise."

Tags: CD sales, digital download, digital music, music downloads, music industry, The NPD Group

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