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NPD: People Getting More Music, But Not Buying It

26 Feb, 2008 By: Billy Gil

Despite the declining music industry, people are still acquiring music in droves — they're just doing it illegally. Research from The NPD Group says the amount of music U.S. consumers acquired in 2007 was up 6% from 2006, while there was a 10% decline in music spending, from $44 to $40 per capita among Internet users.

Overall, paid music acquisition fell to 42% of total music acquisition in 2007, down from 48% in 2006. NPD estimates show 1 million consumers dropped out of the CD buying market in 2007.

The exodus in CD buying and illegal downloading was led by teenagers — 48% of U.S. teens didn't buy a single CD in 2007, up from 38% in 2006. And while the percentage of Internet users engaging in peer-to-peer (P2P) file sharing plateaued at 19% in 2007, the number of files each user downloaded increased, with P2P file sharing increasing among teens.

Legal music downloads now account for 10% of the U.S. music market, with Apple's iTunes growing to be the second-largest U.S. music provider in 2007 (behind Wal-Mart), supplanting Best Buy Co. and Target Corp. iTunes has more than 50 million customers and has sold more than 4 billion songs since launching in 2001, according to Apple.

The number of consumers buying music legally grew to 29 million in 2007, up 5 million from 24 million in 2006, driven primarily by consumers age 36 to 50, a segment that aggressively snapped up digital music players in 2007.

“The continued growth in legal download sites is encouraging, yet the industry struggles to improve the value of each digital customer,” said Russ Crupnick, entertainment industry analyst for The NPD Group. “With so many baby boomers and gen-Xers entering the market, there are certainly opportunities to sell more digital albums, promote older catalog titles or create bundles that will raise revenue. In the near term that's going to be the best means available to narrow the gap on dwindling CD revenue.”

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