Will digital sales almost equal CD sales by the end of 2010 as predicted by NPD Group's Russ Crupnick? It will be close, but it probably will not happen in 2010. Digital would have to experience a much higher growth rate to match a reasonably expected drop in CD sales.

If current growth rates hold through the end of 2009, what would need to happen in 2010 for the wholesale value of CDs to equal that of digital sales? CDs would need to drop 34% in 2010 (not likely but possible), digital albums would have to increase by 20% (unlikely) and digital tracks would need to rise by 20% (very unlikely). Or, CDs would equal digital if CDs sales dropped by 40% (not likely), digital albums increased by 12% (likely) and digital tracks rose 9% (likely). In a more likely scenario, CDs will drop 23%, digital albums will increase 12%, digital tracks will rise 9% and CDs will end the year with 27% more value than digital. Extend those growth rates through 2011 and digital will indeed overtake the CD, but it could be very close if the current weak digital growth continues to slow and the CD decline slows a bit.

If that likely scenario turns out to be the case, CDs will exceed digital by only 2% in terms of track sales, counting an album as ten tracks. If an album is considered to have 12 tracks, then CDs will end the year up 14% over digital.

These estimates are for purchased downloads only. Streams and temporary (tethered) downloads are not included. For wholesale revenue estimates, a CD was assigned a $9 value, a digital album was given a $7 value and a digital track was given a value of 74 cents (to account for a blend of higher and standard wholesale costs from variable pricing). Estimates are based on data from Nielsen SoundScan.

Next question: are digital music sales "growing at 15 to 20 percent" per year, as NPD Group's Russ Crupnick said about a recent NPD report?

Yes and no. Through the end of June, digital unit sales were up 15% year-over-year, according to Nielsen Soundscan. (With the advent of variable pricing, the value of sales is probably a point or two more.) But digital unit sales have been flat for the last few months and have actually dropped a bit since June 30. Nearly all the growth in 2009 came in the post-Christmas period in the beginning of the year. By the end of 2009, annualized growth could very well be lower than the current year-over-year growth rate.

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