NPD: Music sales up 4% in 2011, fueled by digital downloads

Tools

After years of declining music sales fueled by eroding demand for physical media and the maturing digital services segment, total music-track sales across the U.S. increased 4 percent in 2011 according to new research issued by NPD Group, which credits the turnaround to healthy premium downloads.

The total number of U.S. CD music buyers increased 2 percent in 2011 to 78 million, the segment's first growth in years. Although CD sales continued to fall, the decline was not as severe as in years past, and CD buyers continue to outnumber paid digital music downloaders by nearly a 2-to-1 ratio. Consumers who purchased CDs cited a perceived improvement in the quality and value of the music available as well as a greater ability to learn about music prior to purchase thanks to sources ranging from conventional AM/FM radio to streaming services like Spotify and Pandora--in addition, 43 percent of the Internet population tuned into digital radio broadcasts in 2011, up from 29 percent two years earlier.

Paid download buyers increased 14 percent in 2011 to 45 million, NPD reports. Digital buyers also increased their spending at Apple's (NASDAQ:AAPL) iTunes, Amazon MP3 and rival digital storefronts: The average annual expenditure for digital music surged 6 percent in 2011 to $49 per consumer.

"Despite all of the exciting online radio options, we are still seeing healthy growth in the market for digital-music downloads," NPD senior vice president of industry analysis Ross Crupnick said in a statement. "This growth is fueled by an increase in mobile devices and a core base of consumers who want to own the music they listen to, despite all of the emerging radio options... As long as consumers want to own digital tracks and continue to have a passion for the physical format and a way to play their CDs, online radio and paid-to-own music will live in harmony."

NPD adds that unpaid music acquisition (e.g., P2P file sharing and trading music on hard drives) declined in 2011, with only 13 percent of Internet users downloading music from a P2P site in 2011, down from a peak of 19 percent in 2006. "Industry efforts to combat illegal file sharing, and increased options for listening and downloading legally, have resulted in a sharp reduction in the number of P2P music downloaders," Crupnick said.

For more:
- read this release

Special Report: What are the best music apps of 2011?

Related articles:
The future of the music industry is mobile
Gartner: Consumers still spend $2.2B a year on ringtones, ringbacks
The Flaming Lips' Wayne Coyne sounds off on music and mobile
Mobile music remixed: Operators tune in new features and services