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The Rise and Fall of the Music Industry

Edit:  The original chart was misleading at best (thanks, Aaron!). Here’s the new one (adjusted for inflation and per-capita):

Note: These are stacked charts. For example, in 1973: 8-tracks = $12M, vinyl = $34M, and cassettes = $2M.

At peak:

• 8-track = $13M
• Vinyl = $43M
• Cassettes = $34M
• CD = $63M
• Digital = $10M  (and still growing; illegal activity not shown)

In their first 6 years, CD went to $24M and Digital Downloads went to $10M.

Here’s a great article with even more. Hint: the death of the music industry is highly correlated with the death of the album.

Every picture tells a story, don’t it?   – Bob

Old graphic:

9 Comments to The Rise and Fall of the Music Industry

1. 

   Ok, so what’s happening? Cd sales are 1/3 of what they used to be. Digital downloads apparently are 1/2? How can this be true? Are people just streaming music from Pandora now and not actually buying?
leemincy on February 16th, 2011
2. 

   Mainly iTunes.

   Bob
Bob on February 16th, 2011
3. 

   iTunes are digital downloads, indicated in red. And this chart suggests they have roughly halved from around 13 bill to 6 or 7 bill. This is what I find confusing as it seems this chart shows all music purchases have declined significantly. (I’d assumed iTunes sales were fine). Could this suggest that, like videos or software, music is moving to a rental or subscription based model, from one of actual ownership?
leemincy on February 17th, 2011
4. 

   This is a stacked area chart. Digital downloads are up 5X in the last 5 years. Overall industry sales are way down.

   Bottom line: The CD, which has sustained the industry, is dying – and downloads are not enough to fill the gap.

   Bob
Bob on February 17th, 2011
5. 

   Yes, this makes sense. Thus my question about the move to subscription based listening.

   I know of a lot of (non-audiophiles) who stream Pandora and internet radio experiences and do not buy music at all. Perhaps that is the general trend shown here, given the decline in overall sales.

   Interesting.
leemincy on February 17th, 2011
6. 

   I’m glad to se the numbers adjusted for inflation but “per capita” is misleading, IMO. What this tells us isnthat the average person is pending less on music purchases. But given population growth, the industry overall might be selling billions more music in inflation adjusted dollars now than at most time in the past, but the “per capita” depiction would obfuscate that.
nathan_h on February 19th, 2011
7. 

   I’m glad to see the numbers adjusted for inflation but depicting it via “per capita” is misleading, IMO. What this tells us is that the average person is spending less on music purchases. But given population growth, the industry overall might be selling billions more music in inflation adjusted dollars now than at most times in the past, but the “per capita” depiction would obfuscate that.

   Talking about dollars instead of units is also not ideal IMO. It tells us something about the industry but not about the customers. It’s possible people are buying more music nownthan ever before but because the prices are lower (in inflation adjusted dollars) that rise in units isn’t reflected in a corresponding rise in revenue.

   I’m not saying either hidden fact is true, but that the graph doesn’t currently make clear the extent to which each may be happening.
nathan_h on February 19th, 2011
8. 

   Maybe they are selling billions more. But I just spent a weekend in Tahoe and the only music I heard all weekend was streaming from Pandora. Here’s an excerpt from an article today that reflects free streaming on music industry revenues.

   “Music execs stressed over free streaming
   Free music streaming services have replaced piracy as the chief concern for the ever-struggling music industry

   By Joab Jackson, IDG News Service
   February 24, 2011 05:09 PM ET

   Free streaming services are replacing piracy as the chief culprit of music industry revenue loss in the minds of fiscally frustrated executives, if a number of panel discussions at a New York digital music conference are any indication.

   People are listening to more music than ever before, but they are paying less for it, noted Russ Crupnick, a president at the analyst firm NPD Group, speaking at the Digital Music Forum East conference, held Thursday in New York.

   Crupnick noted that the average consumer listened to music 19.7 hours a week in 2010, up from 18.5 hours per week in 2009. But at the same time, consumers have been buying less music. In 2010, only 50 percent of consumers purchased music, by either buying a CD or paying for a downloadable music track, down from 70 percent in 2006.

   “We have lost 20 million buyers in just five years,” Crupnick said. Moreover, only about 14 percent of buyers account for 56 percent of revenue for the recording industry.”

   You can read more here:
   http://www.networkworld.com/news/2011/022411-music-execs-stressed-over-free.html
leemincy on February 25th, 2011
9. 

   Note that these “free” services actually make the industry money. They pay fees for everything they play, and make money through advertising or subscription payments (ie, I pay Pandora $30 a year to get a higher bit rate streamed and to hear it commercial free).
nathan_h on February 25th, 2011