Market Insight

US recorded music sales up year-on-year bucking the long-term decline trend

January 09, 2012

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US album sales rose for the first time since 2004 to reach 330.6m units in 2011 according to Nielsen Soundscan. Of these 31 per cent, or 103.1m units, were downloads and the remaining 69 per cent were physical sales, which accounted for 227.5m units during the year. This represents a year-on-year decline of 5.4 percent in CD sales which stands in marked contrast to the greater than 20 per cent declines of the previous three years (it is too early to be sure, but at this stage it looks like some spending might have migrated to music away from DVDs and Blu-ray spending). By contrast, digital album sales grew 19.5 per cent.

The singles market also saw accelerated growth, up 8.4 per cent year-on-year to reach 1.3bn sales; growth in 2010 was just 1 per cent.

Although year-to-date sales were up on 2010 throughout much of 2011, the numbers - which are in line with IHS Screen Digest estimates - should not be taken as a sign of a long term return to growth from the industry. The history of global record business is littered with occasional spikes; indeed in the US in 2004 sales grew only to fall again the following year.

While much of the credit for album growth in 2011 has been attributed to Adele's '21', this needs to be seen in context: as a whole new releases actually fell 4.2 per cent year-on-year, while catalogue titles grew by 9 per cent. We believe that this is consistent with the idea that, demographically speaking, the average music purchasing consumer is getting older and this does not bode well for the health of the business long term.

That said the performance of '21' should not be ignored. It did 5.2m units in the US alone - without it sales would in fact have been down year on year. But Adele is not the only factor: Amazon's policy of heavy promotional discounting on digital copies Lady Gaga's 'Born This Way' also generated significant traction. Consequently we believe that 2011 may well turn out to be a blip, and that 2012 could see a return to decline, unless the titles released capture the consumer's imagination again.

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