Fewer Americans Buy Music In 2009, Recording Industry Panics

A new NPD study is out saying that the American recording industry had 24 million fewer customers in 2009 than it did in 2007. Now this is only a measure of the number of people who bought music, not a measure of total sales.

Most of the new numbers show exactly what one would expect. There were 33 million fewer CD sales year over year. That said, digital spending has increased a whopping 52%, which means that on average, consumers of digital music are spending $50 on average.

As per usual, the record industry blamed filesharing without any real data to back this up. The story on Billboard mentions that there was a decline in the number of people buying digital music, down to 34.6 million in 2009 from 35.2 million in 2007. And while no other source mentions this, Billboard sees it fit to attribute this to the “increased use of file deliver sites such as MegaUpload.” I would like to remind everyone that this is mere speculation.

In fact, there is a far better hypothesis as to why digital music consumption is down: people are using streaming options. We’re not living in 2002 anymore where it made you cool to have gigs and gigs of music on your old second-gen iPod Brick Edition. Given the success of streaming services like Pandora and YouTube, people can get their fix of music without actually having to purchase a file.

Now this is both good and bad for the record industry. The bad is that entities like Sony BMG and Universal Music Group are used to selling music and making a lot of money from that. So given that streaming is a new beast from a business perspective, music industry types are feeling the pressure of needing to think up a new business model. At the same time, there are way more people who are willing to stream a song than who would ever buy a song. Stuck-up alternative types who would never buy a Lada GaGa song might play it on YouTube, providing massive consumer-bases that were previously unreachable. Now it’s just a question of better monetizing these people.