2006: Album Sales Plunged, Digital Downloads Soared

The transition to digital continues apace, as the same trends we have been following for the past 5 years are still in effect. The AP reported:

"U.S. album sales continued to decline in
2006, down nearly 5 percent from the previous year, but total music sales were
up thanks to a huge increase in digital downloads.

Year-end sales figures released Thursday by Nielsen SoundScan said 588.2
million albums were sold in 2006 — a 4.9 percent decline from 2005. But digital track sales increased by 65 percent over the previous year, with
582 million tracks sold, and digital album sales more than doubled, with nearly
33 million sold last year."

It appears that sales of digital singles are still gaining in a big way, as sales of (physical) CDs cintinue dropping. Perhaps there may be some positive elements to the overall data:

"Consumers made nearly 1.2 billion music purchases in 2006, up 19.4
percent from just over 1 billion in 2006, according to the company’s
data, which is based on point-of-sales tracking. That increase comes
even as sales have dropped 4.9 percent of albums, whether by digital
download or on CD and other formats that you can actually hold in your
hands. Overall, the industry sold 588.2 million albums in 2006."

Terrestrial Radio was the prior centralized method of promoting album sales. My argument has long been that terrestrial radio abandoned their
, and they have now lost one — perhaps even two — generations
of music fans. Recapturing those ears will be extremely difficult, if not impossible.

Its no surprise that as radio has self-immolated, album sales continue to falter.

Meanwhile, legal outlets for digital music continue to expand: YouTube, iTunes Music Store, MySpace, and Satellite Radio, amongst others. I also stream non-commercial radio: WFUV, NPR, and my favorite, BBC 2. Is it any suprise that just a click or two away, listeners download a track or three?

I find more music via non-radio outlets than I have via Radio in years. Perfect example:  Have a listen to this BBC show on The Beatles new remix/mash up, ‘Love’.

I’m old school, and find many lossless compressions not all that lossless. So I may just have to click over to Amazon and order the Beatle’s Love in Audio DVD in 5.1 surround sound . . .


Albums sales plunged in 2006, but digital downloads soared
AP, Thu, Jan. 04, 2007

Downloads at iTunes, other sites push music sales higher in ’06
Frank Michael Russell
Mercury News,Thu, Jan. 04, 2007

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. wnsrfr commented on Jan 4

    Meanwhile, the hottest musical gift in my house this holiday season is the Crosley Stack-O-Matic record player I gave my wife.

    We pulled out all our old albums and really-old 45’s and the kids are all astonished at how the records flop down and the needle auto-magically lands on the record.

    Totally retro, and, well, much easier than the old fancy turntable hooked-up to the stereo. Just a nice wooden box that you can stack up to 5 records at a time on…

  2. someguy commented on Jan 5

    Barry: great interview on Market Watch about Mr. Copper having a PhD.

    Can we start a post about oil and natgas and energy ?

    Something really funny is going on. Oil is supposedly down because the warm weather is cutting the demand for heating oil. HOWEVER, if that were the case, shouldn’t natgas be down as well ? After all, the natgas inventories are absolutely HUGE right now.

    So… something is amiss.

    a) Is the demand for oil and products falling because of factors other than the warm weather, ie has oil consumption for other purposes fallen ? (Some agencies are reporting consumption has fallen 3% now. Does this tie in with your ATA tonnage decrease ?)

    b) Are the natgas traders being silly buying at these prices ?

    c) Is a hedge fund in trouble and unwinding its oil positions and if so are others about to follow ? (I heard a rumor to this effect today.)

    I think its worth discussing. Something isn’t right here.

  3. Chris Anderson commented on Jan 5


    The problem with the Nielsen numbers is that they’re in units, not dollars, and they mix apples and oranges with by combing album units with single units. So the AP statement that “total music were up” is incorrect. Total music sales in dollar terms were down.


  4. laura commented on Jan 5


    I use Lowrys Service & my hubby has an account with you. You guys seem to be contradicting each other. He’s super bullish for the year and you sound like you are going to open the mother of all shorts in the coming weeks.

    But the funny thing is we learned about Paul Desmond from your interview with him.

    Do you think the bearishness is getting to your head?

    Is my doubt a sign of “bear capitulation”??

    Oh well. I guess we’ll find out soon enough :-/


  5. Fred commented on Jan 5

    “I’m old school, and find many lossless compressions not all that lossless.”

    I couldn’t agree with you more on this point!

    The music industry has completely SCAMMED “listeners” by selling that crap MP3 file form. IT IS GARBAGE. If you compared the data bits from a Digital file (master recording) to the lossy MP3 you would see the complete RIP OFF consumers have fallen for! I cannot believe more is not being made of this.

    It’s like ordering a big bag of potatoe chips (that looks full before you open it) and upon opening it you see only 10 chips.


  6. someguy commented on Jan 5

    Google or wiki FLAC. Its lossless and free.

  7. Gary commented on Jan 5

    Unfortunately I’m a bit older school than you so downloading lossy formats won’t cut it.

    Then there is:
    * the despicable actions of the RIAA
    * CD’s retailing for $20 bucks a pop
    * mostly junk new music
    * highly fragmented sources for new music
    * radio’s implosion

    My other old school problem is visual/album orientation. I often recall music by the album it’s on. I have a modest collection of several hundred vinyl albums and several hundred CD’s. I rip them all as high CBR MP3’s and archive them as lossless WMA’s. (If I think it can’t be ripped, I don’t buy it.) I have about 150 vinyl’s to go. It’s like new music. Having done some writing in my time I am sensitive to copyright issues. And once people hear how big the files are they aren’t interested anyway.

    One of my sources for new music or old music I may have missed is The Big Picture. I began reading BP in summer 2005 and have been hooked ever since. I was struck by the similarities with my musical tastes. Another major source is allmusic. I poke around allmusic while ripping. It’s a fun way to pass the time.

    As for the recording industry, I think Pink Floyd said it best:

    “And did we tell you the name of the game boys? We call it riding the gravy train.”

  8. dark1p commented on Jan 5

    Barry–if you buy the ‘Love’ CD/DVD set, put up a review of the DVD 5.1 mix. I lack the equipment to enjoy that one and wonder what you think. The CD sounds amazing, by the way. There are a couple of incredibly corny moments where taste slipped, but they’re just moments, thankfully. (namely, the terribly hack sax riff at the very, very end of Lady Madonna and Paul’s cornball vocal ending on Back in the USSR–something he does in concert, too, and always makes me cringe) The new mixes on the ‘straight’ songs without any mashes or such are spectaclular. Lucy in the Sky is so clear and distinct, it gives me goosebumps. And running Mr. Kite into the heavy riff from She’s So Heavy is simply brilliant and amazing.

  9. finance girl commented on Jan 5

    Speaking of radio….Here’s a shout out for the best non-commercial radio station, KEXP. Can be streamed and is a beacon in the musical wasteland of radio.


Read this next.

Posted Under