Digital Decline

Musicsales

The Recording Industry Association of America has released its numbers for 2013. You can find the U.S. report here. It shows that even with digital downloads, subscriptions and streaming, the industry revenues are, at best, holding even in the U.S. after many years of decline. The overall picture shows an industry still in retreat.

From the music industry blog a few weeks back:

The IFPI and RIAA today released their annual music sales numbers. Though there are positive signs, overall they make for troubling reading

  • Total sales were down 3.9%. Based on 2012 numbers the trend suggested that 2013 revenues should have registered a 2% growth, so that is a -6% swing in momentum.
  • Digital grew by 4.3% which was not enough to offset the impact of declining CD sales, which has been the story every year since 2000 except last.
  • Download sales declined by 1%. Continued competition from apps and other entertainment, coupled with subscriptions poaching the most valuable download buyers is finally taking its toll.
  • Subscriptions up by 51%: An impressively strong year for subscriptions but not enough to make the digital increase bigger than the physical decline on a global basis nor in key markets, including the US.

A similar trend can also be seen with the most recent data from the Camera and Imaging Products Association (click on the chart for a larger image):

Shipments of Still Cameras

There were a number of factors that negatively impacted music sales. Increased competition for entertainment from TV, movies, gaming consoles, etc. The relative ease of copying and sharing digital audio. The reluctance of the consumer to pay for recorded music. The inability of the industry to quickly embrace new digital distribution models. One of the major factors was the emergence of portable digital music players. The convenience of carrying a music collection without the bulk of hundreds or even thousands of CDs created a dramatic shift in consumer behavior as well as a new business model that relegated the industry to a very different role namely as a provider of catalogs with sharply reduced profits.

And now the same thing is happening to digital still cameras. The new point and shoot camera is the smartphone. And the impact on the camera industry is no less dramatic than what happened to the music industry.

Digital decline and digital disruption. Both at the same time.

4 replies
  1. Michael Weening
    Michael Weening says:

    Interesting statistics. I have not bought a CD in a long time due to Spotify (and before that RDO). Why buy a CD when there is 15M songs at your fingertips .. that plays on my Sonos too?

    Reply
  2. Matt
    Matt says:

    I think the industry needs to grow a pair and pull the plug on the Spotify, Pandora, YouTube and other iTunes.
    The issue is not in the formats, it is in the distribution model: You cannot ask people to pay for something you are widely giving out for free. The “need to buy” only exist if the product is scarce. To top this off, prices are at an all time low!! In the ’60s people paid about 80 cents for a 45rpm. That’s about $7 in today’s money, or $3.50 a song. Match that to the $0.99 or $1.29 on iTune and keep wondering why earnings are down.

    The film industry was in the same boat ten, fifteen years ago, but instead of giving away the store in fear of piracy, they tightened their distribution and treasured their catalogs … and you don’t hear them complain anymore!

    Rant off!

    Reply

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