CD Purchase Gap Not Filled By Music Downloads

On-demand downloading and easy unfettered copying have slowly eaten away at consumer impulse music purchases, an industry report finds.

The percentage of Americans who bought CDs in the last six months fell 15% compared to 2002.

An Ipsos Insight report, TEMPO: Keeping Pace with Digital Music Behavior, concludes that the trend mirrors a shift toward digital music. Nevertheless, Americans continue to buy CDs of music from their favorite artists, according to Ipsos Insight's quarterly report.

Fifty-one percent of U.S. consumers over 11 years old, bought an actual CD in the past six months and the average number of CDs purchased was 2.8, Ipsos Insight found. The average number of CDs owned is 78, according to the report. Teens own 32 CDs, on average, while consumers between 18 and 54 owned more than 100.

Sixty-two percent of U.S. downloaders said they bought CDs of their favorite artist's latest release, while only 28% reported paying to download one or more tracks from new releases by their favorite artists. Only 27% of those who bought music through more than one channel of acquisition bought an entire CD before downloading singles from the same album, according to the report.

Twenty-three percent of U.S. downloaders bought single tracks from unknown artists, while only 17% bought the full length CD, according to Ipsos Insight.

Matt Kleinschmit, VP of Ipsos Insight and author of the TEMPO program, said that data suggests that music sales are down over 20% since 2000 due to an 'impulse gap.'

"The increase in the number of digital music acquisition options, including on-demand downloading and easy unfettered copying, have slowly eaten away at consumer impulse music purchases -- thus creating a gap in revenue," he said. "Where in the past someone may have purchased a CD from a new or unfamiliar artist on a whim, they are increasingly more likely to digitally sample the music before deciding to make a full physical CD purchase."

Kleinschmit said that downloading cannot fill gap.

"Other new and innovative music products must also help to fill this void," he said. "Most notably, mobile offerings -- ringtones, ringbacks and full-song over the air (OTA) downloads -- have shown particular promise among youth, a market segment who rapidly embraced filesharing, but is also highly impulsive in their music purchase habits."

Kleinschmit said the mobile channel is well-positioned with established billing relationships and an often captive, commuting consumer base that seeks instant gratification through impulse purchases.

"In addition, online music services have been shown to boost spending on a la carte music downloading, and could further leverage this behavior by helping consumers to discover new music, creating impulse buying opportunities and making it easy for people to purchase what they want, when they want it," he said.

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