The NPD Group, a market research firm specializing in the entertainment industry, reported that in 2008, compared to 2007:
- The number of Internet users paying for digital music increased to 36 million from 28 million.
- Purchases of online digital music downloads increased by 29 percent and now account for a third of all music tracks purchased in the United States.
- The number of people buying CDs decreased by 17 million.
- The number of people buying music at all decreased by 13 million.
- Among internet users, the number purchasing CDs or digital music decreased from 65% to 58%.
Of course, it’s the last two of these statistics that should be freaking out the music industry. Not only are they trading analog dollars for digital dimes, but the swap may be worse than one for one! Moreover, perfectly legal distribution channels like MySpace Music and Pandora may be significant factors in the decline of music purchases.
I don’t think any of this should come as a big surprise to anyone. But I suspect it will break the last strongholds of denial for some. Stay tuned for when video starts to suffer the same fate.