U.S. consumers have adopted digital music stores at a better rate than consumers in other countries, but greater digital adoption may lead to slower adoption of new business models. The logic: the more accustomed a group of consumers becomes to the experience of buying downloads, the greater the difficulty of breaking new streaming models.
Take a look at four countries – U.S., U.K., Canada and Australia – where unit sales numbers are available. (Many other countries report their annual sales in value, not units.) The U.S. got a head start on digital music sales as the U.S. iTunes Music Store launched in July 2003. iTunes launched in the U.K. in June 2004, in Canada in December 2004 and in Australia in October 2005. Consequentially, the U.S. has the highest per-capita consumption of digital tracks of the four countries. At 3.92 per person, U.S. track sales far outstrip those of the U.K. (2.44), Canada (1.69) and Australia (1.68).
The U.S. ranks behind the U.K. in terms of per-capita album sales. At 2.10 per person, U.K. consumers double the rate at which Canadian consumers buy album (1.05) and easily best Australia (1.42) and the U.S. (1.25). In terms of physical album sales, the U.K.’s 1.84 per-capital figure is well ahead of Australia (1.32), the U.S. (1.00) and Canada (0.91).
For digital albums, the U.S. and the U.K. are tied with 0.26 per capita. Canada had 0.14 per capita in 2009 while Australia had 0.11.
That lead in digital downloads may mean the U.S. IS be more dependent upon downloads than its peers. Other markets arguably have more robust music streaming markets. While the U.S. has long had Rhapsody and Napster, streaming models lack the momentum seen in other countries. The U.K. now has We7, Spotify, Nokia’s Comes With Music, MySpace Music and others. In Australia, EMI Music has teamed up with broadband provider AAPT to bundle music streaming and downloading with broadband service. In addition, Australia is home to Guvera, a new, ad-supported music service that has raised $30 million in venture funding to date.
The U.S. and U.K. are the first- and third-largest music markets in the world (Japan is second). In 2009, U.S. CD sales dropped 16% and album sales fell 11%. Digital sales continued to grow but at a slower pace. Digital albums rose 19% and single digital tracks grew 12%. The U.K. has healthier physical retail market than in the U.S. In the U.K. last year, album sales dropped 3.5% to 128.9 million, or 2.1 per capita.
Digital download growth is higher in the U.K. because downloads are more mature in the U.S. In 2009, U.K. digital track sales rose to 149.7 million, a 33% increase from 2008, or 2.44 per capita. The U.S. passed 2.44 per capita track sales years ago. U.S. per capita track sales were 3.52 in 2008, 2.8 in 2007 and 1.95 in 2006. In comparison, Canada and Australia had lower per capita download sales in 2009 than did the U.S. three years earlier.
Of course, different markets are characterized by different factors. For example, the U.K. government is taking an interventionist approach to digital piracy that is unlike the more market-driven solutions employed in the U.S. And lawsuits against citizens were for years a standard tactic in the U.S. while other tactics have been used elsewhere.