Nielsen SoundScan Mid-Year Report: Digital Album and Single Sales Slow

Digital tracks sales are on the decline and the trend is accelerating.

For the year to date as of June 30, digital track sales have declined 2.3% to 682.2 million units from the 698 million units that tracks scanned in the first half of 2012, according to Nielsen SoundScan.

In the first quarter, track sales declined 1.34% to 356.5 million from the 361.3 million. In the second quarter the decline more than doubled to 3.3%, with track sales totaling 325.7 million units this year versus 336.7 million in the second quarter of 2012.

Justin Timberlake, Macklemore & Ryan Lewis Lead 2013 Mid-Year SoundScan Charts

At mid-year, 51 songs had scanned more than 1 million units. Thirteen of them scanned two million units or more, led by the 5.6 million units garnered by Macklemore & Ryan Lewis’ "Thrift Shop" (featuring Wanz).

Last year, two titles accomplished the feat of scanning more than five million units -- Gotye's "Somebody That I Used To Know" (featuring Kimbra) and Fun's "We Are Young" (featuring Janelle Monae). A total of 47 titles hit the 1 million unit mark, of which 13 were more than million scans.

So far, Justin Timberlake's "The 20/20 Experience" is the best-selling album with 2.04 million scans. It is in fact, the only million-seller as Bruno Mars "Unorthodox Jukebox" -- with scans at 985,000 units -- looks like it will need another week to break the million-unit milestone. Last year, only one album had scanned more than 1 million units -- Adele's "21," which had scanned 3.7 million units.

One bight note, at the mid-year point 15 albums had scanned more than 500,000 units, compared with last year when only 11 albums had accomplished that feat at the mid-year point in 2012. Total units counted by SoundScan fell 2.9% to 825.9 million units from the 850.2 million units monitored last year.

Getting back to the softness in tracks, the decline can be attributed to a 20 million unit decrease in catalog sales, which at the mid-year point fell to 366.7 million units from the 386.9 million units that were scanned at the mid-year 2012. Meanwhile, current track sales grew slightly to 315.5 million from 311 million units.

If the decline had been in current tracks, a case could be made that streaming might be impacting track sales -- even as industry executives continue to insist that streaming does not impact album sales. But with the decline in catalog sales, it’s more likely that the decline is due to the growing popularity of complete my album features at download stores, and the possible repricing of catalog sales up to 99 cents and $1.29 price points from the 69 cent tracks that was rolled out to catalog song titles when iTunes first embraced variable pricing in 2009.

In another alarming turn of events, album sales continue to decline, with the configuration experiencing a 5.6% decrease to 142 million units at the mid-year point, down from 150.5 million units garnered by the middle of 2012. That represents a decline of 5.6%.
Like with tracks, the decline accelerated in the second quarter with album sales falling 6.4%, versus the 4.9% decline at the end of the first quarter for the configuration. Within album sales, the digital album growth slowed during the second quarter to a 1.9% increase up to 28.3 million from 27.8 million units in the corresponding period last year. For the full year to date, digital albums sales are up 6.3% to 60.8 million units from the 57.2 million units scanned during the first half of 2012.

Moving over to market share, the Universal Music Group leads the industry with a 37.6% share in albums plus track equivalents albums, whereby 10 tracks equal one album. That represents a seven point percentage gain from the 30.1% it had posted last year before it completed its acquisition of the majority of EMI assets.

Sony Music Group comes in a strong second with 29.6% in market share, which is up from the 28.9% it posted in the first half of last year.

The Warner Music Group, which should benefit from the Parlophone assets it acquired in the rest of the year, doesn't have any of that market share yet included in its results, as it only completed the acquisition after the mid-year point. But even without EMI, WMG posted a market share gain, growing to 20.2% from the 18.4% it had in the first half of 2012.

Independents, meanwhile, finished with 12.1% down from 12.7%, but that's only if you count market share by distribution ownership. If you count market share by label ownership, that is a dramatically different picture with indies usually claiming upwards of 30% market share. For a complete market share tally based on label ownership, see next week's issue of Billboard.

Moving over to the retail sector, chains and the mass merchant category suffered equal ruing the first half of the year, with chain sales down 17.3% to 19.3 million units from 23.3 million units. The discount department store chains did slightly worse with a 17.4% decline to 36 million units from 43.6 million units last year.

Independent stores also declined with a 10.7% drop in scans to 9.4 million units from the 10.5 million units that sector had at the mid-year point last year. And, of course, online merchants (whether digital or physical) continue to gain market share. Download stores experienced a 6.3% increase, while online, mail order and concert venues experienced a 5.7% gain to 15.2 million units from the 14.4 million units scanned in the first half of 2012.