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March 21, 2007

The Digital Revolution vs. compact discs

Posted by Tricia Duryee at 1:46 PM

In light of my earlier post on how phones are increasingly capable of playing music and being used as a standalone music player, this article in the Wall Street Journal today is interesting.

It reported that compact-disc sales for the first three months of this year plunged 20 percent from a year earlier.

One reason, the Journal said, is that music stores are closing, including Tower Records. In fact, one statistic really stood out -- about 800 music stores, including Tower's 89 locations, closed in 2006 alone.

What's more, the downward spiral is moving faster than the rise of sales of digital downloads.

Digital sales of individual songs this year have risen 54 percent from a year earlier, to 173.4 million units, according to Nielsen SoundScan. But that's not offsetting the 20 percent decline from a year ago in CD sales to 81.5 million units. (To me, the figures look better for digital sales, but it must be falling short of filling the gap because songs are purchased individually, whereas CDs are music purchased in bundles.)

I was just talking to a mobile digital music executive about this same topic Tuesday. He argued that overall music sales -- including ringtones, wallpapers and other mobile or online goods -- do offset the decrease of CD sales.

The WSJ covered that aspect, too, and apparently that is not the case.

It reported that even when sales of ringtones, subscription services and other "ancillary" goods are included, sales are still down 9 percent.

The WSJ did note, however, that some recording executives have questioned that figure, provided by a recent report by Pali Research.

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Tricia Duryee
Tricia Duryee
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Angel Gonzalez
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Kristi Heim
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