Recession Driving Digital Music Growth

By March 24, 2009

There is yet another effect of the recession accelerating the adoption of new(er) forms of technology and entertainment. We’ve already seen how the tightening of wallets is driving smartphone and netbook sales, as consumers are now buying only the functionalities they need, as opposed to spending thousands on PC specs they will never utilize. It’s what they call in France “rapport qualité/prix.” Now, The NPD Group reports that our bad times are causing an increase in digital music sales at the expense of CDs, citing consumers’ ability to buy only the songs they want and download them instantly as two of the driving factors.

Digital content now accounts for one-third of all music purchases.

Music downloads increased by 29 percent last year, growing from 28 million in 2007 to 36 million Internet users in 2008. While there was an increase in digital sales, overall, music sales declined last year. The number of Internet users who purchased any form of music online fell from 65 percent to 58 percent in 2008.

Overall, there were 13 million fewer music buyers in the US in 2008 than the previous year. The number of people who bought CDs fell by 17 million.

While music purchases are down, NPD believes that more people are listening to music, via online radio stations such as Pandora and, as well as on social networks. 18 percent of Internet users listen to Pandora, double 2007’s listenership, and 19 percent listen to music on social networks, an increase of 4 percent over the previous year.

The recession is hitting the older media hard – witness the recent closings of Circuit City and Virgin. Of course the latter was in part damaged by its exorbitant prices ($99.99 for season 4 of Babylon 5? Come on. I don’t care about the Shadow War that much. And seeing how lamely that war ended, I’m glad I didn’t pay Virgin’s price).

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