U.S. Music Industry Inches Back

By Joseph Palenchar -- TWICE, 3/24/2005

Washington — U.S. music-industry sales rose in 2004 for the first time since 1999, but the modest 2 percent gain in unit shipments and 2.5 percent gain in retail dollar value left sales well below their 1999 peak, Recording Industry Association of America (RIAA) statistics show.

Worldwide, music industry sales were flat after including rising sales of digital downloads and cellphone ringtones, said London-based IFPI (International Federation of the Phonographic Industry).

For the U.S. industry, physical media and digital download sales were up. Sales of physical media through all distribution channels, including mail order and online, rose 2 percent at the wholesale level to 814.1 million after returns. Their dollar value, based on suggested retail price, rose 2.5 percent to $12.2 billion, the RIAA said.

Despite 2004’s gain, U.S. sales were running well below their 1999 peak of 1.16 billion in units and $14.6 billion in retail dollar volume. That put the industry only slightly ahead of 1994’s $12.1 billion volume.

Last year’s U.S. uptick was mainly due to rising CD and music-video sales. Sales of CD albums, excluding CD singles, rose 2.8 percent in units to 766.9 million, and 1.9 percent in dollars to $11.5 billion. Music-video sales jumped 65 percent in units to 32.7 million, and 51.8 percent in dollars to $607.2 million. Music videos represented about 5 percent of the industry’s total dollar volume, as measured by suggested retail price.

Digital downloading (excluding cellphone ringtones) also took off in 2004, with almost 139.4 million individual tracks and 4.5 million albums downloaded through authorized download services, RIAA said. At an approximate 99 cents per track and $10 per album, retail-level sales hit about $180 million, or about 1.5 percent of the industries dollar volume.

In contrast, sales of the multichannel-music DVD-Audio and SACD formats fell in units and dollars. Their combined unit sales fell short of vinyl LP sales, although their dollar volume exceeded dollar sales of LPs.

Here’s what sold and what did not:

·Full-length CDs: Units sales were up 2.8 percent to 766.9 million units, boosting suggested-retail value by 1.9 percent to $11.5 billion.

·CD singles: Units were off 62.2 percent to 3.1 million, for a retail value of $14.9 million.

·Audio cassettes: Units sales fell 69.6 percent to 5.2 million, for a retail value of $23.6 million.

·Vinyl LPs/EPs: Unit sales fell 11.9 percent to 1.3 million, for a retail value of $19.2 million.

·Vinyl singles: Units fell 7.3 percent to 3.5 million, for a retail value of $19.8 million.

·Music videos (DVD and VHS): Units rose 65 percent to 32.7 million, for a retail value of $607.2 million.

·DVD-Audio: Units fell 20.6 percent to 350,000, for a retail value of $6.4 million.

·SACD: Units plummeted 39.6 percent to 790,000, for a retail value of $16.6 million.

In the first half, DVD-Audio sales were up while SACD sales were down, and Sony attributed that at least in part to music labels that coded hybrid CD/SACD discs of big releases as CDs to get the discs in the CD section of music retailers.

Worldwide, the IFPI reported declining sales of physical formats by 1.3 percent in dollars, to $33.6 billion, and by 0.4 percent in units. However, total global sales were estimated as being flat when downloads and ringtones are factored in.

The total number of tracks downloaded in 2004 rose more than tenfold to more than 200 million in the four major digital music markets (United States, United Kingdom, France and Germany), IFPI said. The trend continued in 2005, with digital sales in the United States in the first two months more than doubling over the year-ago period, IFPI said.