US versus UK CD sales

The 2004 numbers are now out for CD sales in the U.S., and they are rather interesting: U.S. CD sales rose by 2.3% in 2004; It was the first rise in four years, but far below the 8% year over year gains we saw in the first quarter of the year.

The CD format still accounts for 98% of the 666 million albums sold, according to research company Nielsen Soundscan. A total of 140 million digital tracks were legally downloaded last year, equivalent to 14 million albums . . . By the end of the year, purchased downloads reached a weekly high of 6.7 million tracks, up from 300,000 in mid-2003.

Among the top 5 selling U.S. CDs were Usher (#1) and Eminem (#3) — both heavily downloaded on P2P networks.

It gets even more intriguing when you compare music industry results here in the States with those in Great Britain: "The UK enjoyed a record year for album sales in 2004, with 237 million sold in the 12 months up to September, an increase of 3%."

Note that the U.K. population is 60 million people, while the U.S. has under 300 million people. With a population only 20% the size of the United States, the British buy 37% as many CDs as we do. On a per capita basis, U.K. music fans consume nearly twice as many CDs as do their U.S. counterparts

Why is that? How is it that they are setting records — despite vibrant broadband penetration, and widespread access to P2P services — while the U.S. remains far below 1999 levels?

I suspect three factors:

A more vibrant, less consolidated broadcast radio music scene (No Clear Channel Radio);

Less mass produced corporate McMusic so prevalent on the radio in the States — from Ashlee Simpson to insipid Boy Bands;

A robust economic expansion. The U.S. ’90s bubble was far more muted in the U.K., so its after effects are also less insidious.

It doesn’t take much digging to see that the claims of the music industry re: P2P have been greatly exaggerated…

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  1. JJF commented on Jan 7

    Since you mentioned Ashlee Simpson, I was glad to hear her get roundly booed by 80,000 fans during halftime of the Orange Bowl. It was a truly awful performance, and it was refreshing to hear the crowd give their honest opinion. People know good music when they hear it. They’re not getting it today. Not much anyway.

  2. Outside The Beltway commented on Jan 7

    Beltway Traffic Jam

    The daily linkfest:
    Stephen Green has returned — as Kevin Drum.
    Herb Ely
    gives his thoughts on military acronyms.
    Dean Esmay has a bewilderingly complex new set of rules for commenters.
    Kevin Aylward has the Wizbang Weekend Caption Contest.

  3. BusinessPundit commented on Jan 7

    P2P and the Entertainment Industry

    Wired has a great article about P2P networks. I found this part particularly interesting:It’s a commonly held belief that P2P is about sharing files. It’s…

  4. Scott Hudson commented on Jan 7

    I have been arguing this same point for years. In fact, just today I was chatting with a friend about how misguided Metallica was in the whole Napster controversy. If you recall, Metallica was upset that a track from a soundtrack had appeared before the album hit the stores. They failed to realize that those who look for pre-releases are the hard-core fans who think they have to hear new material by their favorite artists as soon as possible. I do the same when word comes down that some of my faves (Paul Westerberg, Springsteen, etc.) have new albums.

    In my personal experience, downloading has ultimately created more record sales as I read about a band and then check them out. The majority of heavy downloaders, however, are the people who weren’t really music buyers. They’re the people who buy Titanic, Shania, and Celine and that’s it for the year.

    What has actually hurt CD sales in the past few years is the rise of DVD sales. When Shrek 2 and Lord of the Rings both sell 8 million in the same week, something else has to suffer. There’s only so much discretionary income.

    One more tidbit to consider – if downloading is so rampant that a 2 million selling album today would have sold 10 million five years ago (I read some industry weasel stating something like that a few months back) then merchandise and ticket sales should be skyrocketing. They’re not – wasn’t this year’s concert season the most disappointing in years? Are there any acts whose t-shirt sales are flying out the stores? No.

  5. BLR commented on Jan 7

    Great points about the merchandise !

    Consider these factoids: What about Book sales? (way down)
    TV viewership? (off significantly)
    Newspaper/Magazine? circulation (way down)
    Sports attendance? (spotty)
    Film sales? (down — but revs up cause of higher prices

    Old media is getting its arse kicked by new media: Video Games, DVDs, & Internet . . .

  6. Greg commented on Jan 10

    You’ve heard of the boy band Take That, right? They had a #2 hit with the song Back for Good in 1995. That was in the U.S. In the U.K., they were absolutely huge.

    Backstreet Boys were also big in Europe back when U.S. radio was on its grunge kick.

  7. Peter commented on Feb 19

    Excellent article. I live in Montreal and I find it very difficult to find new music. I have to rely on Rolling Stone magazine and others to find out what’s going on. I know the music is out there but a lot of it is waterdown and the music industry does not give any new groups time to develop.

  8. fart face commented on Mar 7

    Great records, and the artists who write and produce them cannot be generated and introduced on a quarterly basis. The sorry state of major label music is the result of this product/marketing incompatability. Mentioning ClearChannel as part of the problem is some brave truth…..I hear that kind of talk can get you killed. Look to Steve Jobs to save us from tacky, thug wannabee dinosaurs like Don Ienner and Doug Morris, who see themselves as rockstar pimps, hoing out the Ashlee Simpsons by the dozen WAY before they are ripe.

    Steve Jobs is the David Sarnoff of the next century and the iPOD is THE better mousetrap….church!

    much love,

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