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Music Industry Posts Record Decline

Washington — Digital music accounted for a record 23 percent of 2007 consumer-level music sales, but industry-wide sales nonetheless shrank at an accelerating rate of 11.8 percent to $10.37 billion, Recording Industry Association of America (RIAA) statistics show.

The industry’s record percentage decline was the result of a record 19.1 percent decline in physical media sales to $7.99 billion.

In dollars, industrywide sales were the lowest since 1992’s $9.02 billion and were 29 percent smaller than they had been during the industry’s peak year of 1999, when sales hit $14.58 billion. Last year marked the industry’s third consecutive annual decline and the eighth annual decline since 1997.

Digital music includes downloaded singles and albums, sales through kiosks, subscription download and streaming services (excluding free-to-consumer Web radio), downloaded and streamed music videos to PCs, digital performance royalties to artists and record companies, and mobile sales, which include full-length over-the-air downloads to cellphones, master ringtones, ringbacks and downloaded and streamed music videos.

Physical sales include CDs, cassettes, vinyl records, DVD- and tape-based based music videos, and DVD-Audio and SACD.

Digital gains: In digital, sales grew 26.2 percent to $2.38 billion to account for 23 percent of industrywide sales, up from a 16.1 percent share in 2006 and a 9 percent share in 2005. Consumer purchases of downloaded singles and albums rose 43.2 percent to $1.23 billion, and sales of mobile music grew 13.6 percent $878.9 million.

Mobile music could be near its peak, the statistics showed. Mobile music’s growth rate slowed significantly from 2006’s 83.5 percent gain, and its share of total digital sales slipped to 37 percent from 2006’s 41 percent.

Getting Physical: In the physical realm, sales of CD albums fell 20.5 percent in dollars to $7.45 billion, while sales of CD singles dropped 59 percent to $12.2 million.

In dollars, vinyl records (albums and singles combined) continued to outsell combined sales of DVD-Audio and SACD discs. Vinyl sales in 2007 were $26.9 million compared to DVD-Audio/SACD sales of $6.4 million.

Vinyl showed growth but remained a fraction of the physical media market. Vinyl’s dollar sales (albums and singles combined) were up a modest 5 percent after having fallen every year from 2001 through 2005. In 2001, vinyl’s sales were $58.8 million. In units, sales of vinyl albums rose 36.6 percent to 1.3 million in 2007, up 36.6 percent from 2006’s restated 900,000 and 2005’s 1 million. Before that, unit sales had fallen every year but one since 1998. Despite their 2007 gain, vinyl albums’ unit volume was only 0.3 percent of that of CD albums’ 511.1 unit volume.

Unit sales of vinyl singles in 2007 fell to 600,000 from 2006’s 1.5 million, 2005’s 2.3 million and 2004’s 3.5 million.

In DVD-Audio and SACD, combined dollar sales fell to $6.4 million from $7.9 million. Combined dollar sales have been flat or down every year since 2003, when the association began reporting both formats’ sales separately and when combined sales were $34.3 million. In units, DVD-Audio sales fell 30.5 percent to 200,000, and SACD sales fell 34.2 percent to 3.6 million.

RIAA bases dollar sales on the value of music-industry shipments at recommended or estimated list prices.