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Digital music sales to outpace CD sales

My local paper reports “sales of physical music media (CD) are expected to fall 8 percent to 10 percent this year, while sales of digital music could climb 150 percent to 200 percent. Digital music downloads will not destroy CD sales overnight but something is clearly changing in the music industry. In the third quarter, Apple’s iTunes Music Store made it the seventh-largest music retailer (according to NPD)”. The NPD Group (sales & marketing firm), founded in 1967, provides global consumer and retail information that helps manufacturers and retailers make more informed, fact-based decisions in order to optimize their businesses.

Based on this article, it implies many new customers are moving "more toward" digital music and not CD music. Revenue record labels are also losing as CD sales decline. If one looks ahead 5 years, what happens to CD music? Will digital music improve so much that it will sound better than CD music? Are there plans in the works to make digital music sound better than CD music? Do you have any comments?
hgeifman
pabelson
344 posts
 
Digital downloads are mostly singles. If you count 10 singles as an album, then in 2004 CDs outsold downloads 40:1. That's going to change, but not as quickly as your paper suggests. Download sales cannot continue to triple each year indefinitely. Sooner or later, everybody will own an iPod, and everybody's iPod will be full.

Overall, digital downloads will probably NOT improve quality-wise, because that's not what the market wants. What the market wants is small and convenient. That's too bad, because just going from 128 kbps (the current standard for downloads) to 192 kbps would take you most of the way to CD quality, and still leave room for many, many tracks on a full-size iPod.

You might see the emergence of "audiophile" download sites, which offer higher resolution downloads--at higher resolution prices, of course. But if they happen, they will be even less significant in the mareketplace than audiophile labels are today.
tobias
1,534 posts
 
You might see the emergence of "audiophile" download sites, which offer higher resolution downloads--at higher resolution prices, of course. But if they happen, they will be even less significant in the mareketplace than audiophile labels are today

Pabelson, I'm not so sure this prediction is correct, realistic as it may appear. I am told (in UHF mag) that Apple is looking for more bandwidth so as to be able to supply music in its lossless compressed format. Also, I think any price differential between lossy and lossless downloads is not likely to be so great that it turns away most music buyers.

If download sites really want to take the CD's business, all they need is the ability to sell lossless-format music files. My guess is that's where we're going.

As a side note, that would mean the market for CD-only transports will dry up entirely, but makers of outboard DACs with USB inputs will see a sales upswing.
plato
1,543 posts
 
Tobias, I think you're totally right... Hey, I'll give you $100 for that old, obsolete Teac transport you have there...
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