The BPI has reported figures for 2010 music sales in the UK. In brief, digital (download) album sales increased from 16.1m to 21m (+4.9m); but CD sales declined from 112.5m to 98.5m (-14m).
To be fair, the “singles” market – that is, individual tracks downloaded – rose from 152.7m to 161.8m (+9.1m). If an album contains on average 12 tracks, that would be roughly equivalent to another 0.75m albums. CD single sales are tiny at 1.9m.
Overall it is still a significant decline. What is most worrying for the industry is that CD sales still dominate – there were 4.5 times as many CD albums sold as digital. Anyone can see that the CD market is in severe decline. Shops that stock back-catalogue in depth have disappeared from many high streets, leaving this market to online retailers like Amazon.
The BPI says piracy is the core problem:
Despite unprecedented demand for music, and strong innovation offering consumers new ways to access music online, legal downloads are unable to offset the decline in CD sales because they are dwarfed by illegal competition.
While this may be true up to a point, another way of looking at it is that technology is making the old purchase model for music obsolete. Digital music is so easy to acquire and share that it is hard to persuade people to pay per-track or per-album. It is also a rather poor deal for the purchaser, in that they get no resale rights or tangible goods.
The BPI does not mention it; but another thing I see frequently is where someone buys a CD, rips it to their hard drive, and then sells the CD on. This also costs the industry a sale.
Old-style piracy is a problem too. The market for Beatles Remasters box sets was badly damaged by far east copies, available in bulk for a fraction of the price. There is no easy way for a customer buying online to know whether or not they are getting the real thing.
Instead, the business model that makes sense is a subscription like that offered by Spotify. There is no pretence that users own the music they listen to: rather, they play what they like where they like, choosing from a vast online catalogue.
Apple seems resistant to the idea though, which is understandable since it does so well with its existing iTunes store. And even if subscriptions do catch on, there is no guarantee that the revenue will equal that of the old days of the CD.
Those days will never return though; and the industry should get behind the streaming model as it is so good for their customers. It also has the advantage that they keep paying, whereas people tend to stop buying music once they feel they have enough.
See also: Mark Mulligan’s post about the death of physical media products.