To say the music industry is struggling at the moment is a bit of an understatement. Faced with piracy on a massive scale and new forms of distribution, the industry is facing a stark choice: evolve or die. With buyers of music decreasing at a massive rate of decline, welcome to the streaming generation.

Sales of physical formats such as CDs have been dropping for many years now, with music piracy, digital downloads, and online streaming all contributing to their downfall. New research from the NPD Group, via Yahoo!, shows that 2008 was no exception to this trend.

Buyers of CDs declined by 17 million (19 percent) in the U.S during 2008. This drop took in all demographics but was particularly prevalent amongst teenagers and those over 50 years of age. Possibly because these are the last groups to have carried on buying CDs while the rest of us gave up a long time ago – the youngsters downloading illegally but also buying music they liked, and the older generation carrying on doing what they’ve done all their lives.

To counter this loss in CD buyers, the number of digital music buyers increased by over 8 million in the same time period. Digital music downloads increased by 29 percent meaning that digital music now accounts for around a third of the total market in the United States.

While this is something to celebrate, the numbers don’t add up. Overall, it’s estimated that 13 million less people bought music during 2008 than did so during 2007. But listener numbers are up, with Internet radio station, Pandora, being heavily used, and social networks such as MySpace also seeing increases in the number of music listeners.

From personal experience, I have gone almost totally streaming since the new year after I started using Spotify. While that service isn’t yet available in the States, it shows that are such services available, even massive music lovers will use them extensively, possibly instead of buying music.

It looks to me that the choices the music industry has available are becoming lesser by the day.

Artists are either going to have to strike out on their own in a similar way to how Nine Inch Nails and Radiohead have done, or accept the new 360 deals offered to them which sees record labels taking a slice of all revenue streams. After all, it looks as though live music is becoming more profitable than recorded music anyway.

While the record labels themselves have already accepted that music will one day be free to the consumer, with revenues coming from other sources. Expect this situation to continue for the next few years before a new, legitimate business model which suits all sides emerges.

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Entry was posted on Tuesday, March 17th, 2009 at 6:33 pm under Music, Opinion, Piracy, Technology.

Read more entries by Dave Parrack.
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