Thanks to a surge in digital sales and strong catalog sales -- and possibly the shutdown of a major P2P network -- music sales have jumped in 2011. A recent NARM-sponsored webinar by Nielsen examined the sales spike and showed a number of causes at work.
One number in Nielsen's presentation got the most attention: 4.8. Through August 21, the 33rd week of 2011, track equivalent albums (TEA) were up 4.8%. TEA was down 0.7% at this time last year and finished up 1% at the end of 2010.
The 4.8% improvement is even more amazing when you consider the state of music sales a year ago. Physical albums are down just 4% after being down 19% at the same point last year - a 15-point turnaround. Digital albums are up 19.1% in 2011 after being up 13.5% last year - a nearly 6-point turnaround.
Aside from physical albums, a deficit exists in just one area: current albums. David Bakula, SVP of Analytics and Client Relations at Nielsen, said "The release schedule might be a little bit softer at this point this year."
In spite of the deficit, physical albums have actually fared well in four of eight months this year. A year-over-year loss of 20% in January was followed by 12% in February and 7% in March. Since then, physical has been positive in four out of five months (the lone exception being a slight 2% deficit in June).
Physical albums' resilience comes from two interrelated factors: price and catalog sales. The retail price paid by consumers fell to $9.82 in 2010 from $11.07 in 2008, according to Nielsen (the company did not give a year-to-date 2011 number). It stands to reason that catalog titles are helping push down the average price paid. CD sales of catalog titles, which cost less than new releases and are getting a big push at mass merchants, according to sources, are up 3.5% year to date, according to Nielsen. New release CDs are down 9.5%.
The surge in digital sales is not the result of lower prices, however. "Tracks are expensive as they've ever been," David Bakula tells Billboard.biz. "Digital albums, too." More digital tracks priced at $1.29 and more albums - many deluxe versions - priced above the standard $9.99 cost for a digital album. Even so, people have not turned away from the prices.
One factor behind the increase in track sales could be the shutting down of the LimeWire P2P service in late October of last year. The spike in sales was immediate, noticeable and lasting. From January to October 2010, the year-over-year change in track sales varied between a high of 3.6% in May and a low of -3.7% in April (there were three increases and seven decreases, all of them slight).
Then came the jump in track sales. November was up 17.2%. The gains were lower in December and January - 6.4% and 4.2%, respectively - but seasonal sales gain in December and January were probably masking the greater trend. The year-over-year gain shot right back up to 12.7% in February and has ranged from 11.2% and 13.9% ever since.
Whether or not other factors influenced track sales is difficult to determine given Nielsen's numbers. Two online music services that one might expect to have impacted track sales launched this summer - Turntable.fm rose to popularity in late June and Spotify launched in mid-July. If there was an effect on track sales, it's hard to spot. Track sales improved 13.9% in June, 11.6% in July and 12.9% in August, according to Nielsen. If either service was fueling or cannibalizing sales, it's difficult to tell just from those numbers.
The end-of-the-year tallies will depend on the strength of release schedule - which Bakula believes has been a bit soft so far this year - and whether or not consumers can keep up the rate of their digital purchases. But given the state of recorded music sales in late August, it appears the U.S. market could end the year in positive territory.