Album Sales Down in 2012, But Digital Shows a Healthy Boost

Business Matters: Six Things in SoundScan's 2012 Mid-Year Report to Be Optimistic About

Business Matters: Six Things in SoundScan's 2012 Mid-Year Report to Be Optimistic About

Album sales fell 4.4% in 2012, reversing a brief uptick in 2011, but there were still bright spots in the U.S. music industry, including a continued healthy growth of digital-track sales that indicate a steady long-term turnaround for the business, according to Nielsen SoundScan's year-end tally.

Even the album sales decline wasn't harrowing, considering the four years of double-digit declines the U.S. experienced from 2006-2010, before 2011 produced the first positive sales gain, a 1.4% increase, since 2004.

The Year In Music 2012

Digital continues to ascend, with download stores finally catapulting to be king of the hill in album sales, outpacing mass merchants by selling 111.7 million units, versus the 93.1 million sold in discount department stores like Walmart and Target. By percentage, download stores now account for 37.2% of all album sales, up from 31.2% at the end of 2011. Last year, the two categories were much closer 103.6 million to 103.1 million with the big-box stores on top.

Digital-track sales enjoyed 5.1% growth to 1.34 billion units and thanks to that robust performance,album sales plus TEA (track equivalent albums whereby 10 tracks equal one album), only declined 1.8% for the year.

All this occurred in a year when subscription and ad-sponsored services like Spotify, Muve, YouTube and Pandora continued to grow and create excitement for music fans as well as industry executives. When iTunes and Amazon's MP3 store are added to the mix digital revenue sales are above the 50% mark, according to industry executives.

For the second consecutive year, Adele's "21" was the top-selling U.S. album, scanning 4.4 million units, versus 5.8 million units in 2010. This marks the first time since the SoundScan era began in 1991 where the same album was the top seller for two years in a row. Possibly just as significant, it marks the first time that the same album, "21," has led the digital album sales chart, with over 1 million copies downloaded for two years in a row: 1.8 million scanned in 2011 and 1.04 million this year.

Jack White's "Blunderbuss" was the top-selling vinyl LP, with nearly 34,000 units versus the nearly 30,000 units scanned by the Beatles "Abbey Road" album. Of course, White's album debuted last year while the Beatles' vinyl came out in the previous year and scanned more units than "Blunderbuss" this year, tallying 41,000 units in 2011 for a two-year total of 71,000 units.

Looking at digital-song sales, Gotye's "Somebody That I Used To Know" (featuring Kimbra) was the top U.S. seller with 6.8 million units, versus the 6.5 million units that Carla Rae Jepsen's "Call Me Maybe" scanned. In total, 108 songs hit the million-unit milestone this year, which is down from the 112 songs that accomplished that feat in 2011 when Adele's "Rolling In The Deep," with scans of 5.8 million, was the top-selling title.

But despite the fall in million-sellers in 2012, as many as 18 titles scanned more than 3-million units in 2012, versus only 14 titles reaching that threshold in 2011. Moreover, the top 200 best-selling titles combined had overall sales of 289.3 million units, versus 280.7 million units in 2011.

CD sales continued their decline, dropping 13.5% to 193.4 million while digital album sales jumped 14.1%. Vinyl album sales actually managed to outpace digital's sales growth, increasing by 17.7% to 4.55 million units. But that's still a meager 1.44% of all U.S. album sales in 2012.

Rock and country were the only categories to post album sales gains in 2012 with the former increasing 1.4% to 107.1 million units and the latter increased 4.1% to 44.7 million units; while R&B experienced a 9.6% decline to 50.1 million units; latin dropped 17.5% to 9.7 million units; electronica declined 12.2% to 8.8 million units; and gospel fell 3.4%to 22.9 million units.