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Digital Surge Fails To Stem Music-Industry Decline In ’06

Washington — The music industry’s decline accelerated in 2006 despite a surge in digital sales, statistics from the Recording Industry Association of America (RIAA) show.

Retail-level dollar volume, combining physical-media and digital sales, fell 6.2 percent in 2006 to $11.5 billion, marking the industry’s seventh annual dollar decline during the past 10 years. In dollars, the industry is almost 20 percent smaller than it was in 2000.

Digital sales accounted for 16.1 percent of music industry volume in 2006, up from 8.8 percent in 2005, RIAA found. Digital music for cellphones, from full-track downloads to ringtunes, accounted for 42 percent of the digital market, the statistics also show.

Physical media took a big hit in 2006, falling 13.8 percent in dollar volume to $9.65 billion, but digital sales rose 73 percent to $1.86 billion. Digital sales include single-track and album downloads to a PC, music-video downloads to a PC, subscription music services and music downloaded to a cellular phone. The latter include master ringtones, ringbacks, music videos and full-track downloads. Subscription services consist of paid services that let consumers stream or download individual songs as long as a subscription is paid. Unpaid Web radio is excluded.

Broken out separately, sales of single-track and album downloads to a PC rose 60 percent and 103 percent, respectively, in both units and dollars. RIAA reported downloads to cellular phones rose 84 percent in dollars to $775 million and account for 42 percent of the total digital market.

Sales of physical CD albums (including DualDisc) plummeted 12.9 percent in dollars to $9.16 billion, while sales of music videos on physical media fell 25.1 percent to $451 million. Sales of other types of physical music albums fell 55 percent to $22.1 million. That tiny number includes DVD-Audio, SACD, cassette and vinyl LP/EP albums.

2006 U.S. Music Industry Sales (units, dollars in millions*)

Total Industry Dollars (Physical, digital combined)

Physical Sales

Digital Sales