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Physical Sales Continue to Slide as the Digital Market Heats Up
October 3, 2005
Thomas Mennecke
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As technological progress moves the human civilization forward, fewer people are finding the clumsy, cumbersome and outmoded compact disc useful these days. The availability of files on the Internet has made this limited storage medium a dubious purchase, as CD image mounting tools such as Daemon Tools or Alcohol 120% easily rectifies the need for such devices.

Although such an assessment has been traditionally more fitting for the computer savvy, the situation is becoming increasingly similar for the mainstream audience. Since the beginning of the new millennium, the MP3 player has virtually eliminated the usefulness of the CD for many individuals. The small, solid-state device is able to take an incredible amount of abuse yet still function flawlessly. More importantly, the MP3 player replaces archaic devices such as the CD changer, as it is capable of storing literally thousands upon thousands of songs. Something no Earthly priced CD changer can do.

So is it any surprise to the music industry their brick and mortar staple is slowly slipping into obscurity?

Apparently it is. The music industry is still complaining that CD sales are down, and have found a wide array of explanations. They’ve even tried suing people, thinking it would somehow motivate them to purchase such outmoded devices. According to a recently published report by the IFPI, or the International Federation of the Phonographic Industry, finds that global physical music sales have continued their five-year slide. According to the IFPI, “music sales fell 1.9% to a retail value of $US 13.2 billion in the first half of 2005, compared to $US 13.4 billion in the same period of 2004.”

Different areas of the world witnessed varying degrees of CD rejection. The United States, by far the largest music market, endured a sales drop of 5.3% in value and 5.7% in units shipped. The United Kingdom also saw CD sales drop, although France offset some physical sale losses with only a 2.7% drop in sales value, but shipments grew by 7.5%.

The news wasn’t good in the Asian/Pacific rim, which saw staggering sales losses in both Japan and Australia.

Although physical sales are down, there is some good news. In addition to the music industry saving a ton of money on car insurance by switching to Geico, digital sales are up – way up. The success of music stores such as iTunes nearly counteracted the continuing decline of CD sales.

According to the IFPI, digital music sales have totaled 790 million US dollars in the first half of 2005. The music industry only saw 220 million US dollars at the same time in 2004. This rapid increase in digital music sales equates to an impressive 6% of total sales. As more people adopt such music acquisition methods, physical sale losses should be completely offset within a year.

While the music industry blames both physical and online piracy, lower prices, a declining DVD audio market, and furries for their diminishing CD market, the answer to many of their problems is staring them square in the eye. The global population is moving forward and is finding that the Internet is solving many of their music needs. This report published by the IFPI screams the CD is no longer the viable piece of technology it was 10 or even 5 years ago. The rest of the world has moved on and is waiting for the music industry to catch up.

This story is filed in these Slyck News categories
File-Sharing/P2P Related :: Statistics/Analysis

You can read the IFPI's report here.

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