Digital Music Sales Closing In On CDs

    August 18, 2009

The majority of music sales still come from CDs, but digital music sales are making up an ever- greater share of the U.S. market, according to NPD MusicWatch.

CDs accounted for 65 percent of all music sold in the first half of 2009 compared to paid digital downloads, which comprised 35 percent of music sales. By comparison, paid digital music made up 20 percent of sales in 2007 growing to 30 percent of the music market last year.

"Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products," said Russ Crupnick, vice president of entertainment industry analysis  for The NPD Group.

Russ Crupnick, The NPD Group
Russ Crupnick
The NPD Group

"But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010."

When it comes to the unit-sales volume of all music sold, iTunes leads in the U.S. with 25 percent of music units sold, which is up from 21 percent in 2008 and 14 percent in 2007. Wal-Mart remains in the second spot with 14 percent of music volume sold at their stores and website and Best Buy ranks third.

iTunes continues to cement its lead in the digital music arena, as consumer downloads from iTunes represented 69 percent of the digital music market in the first half of 2009 followed by AmazonMP3, a distant second at 8 percent. Wal-Mart leads all sellers of CDs with a 20 percent share of the physical music market, followed by Best Buy at 16 percent and Target and Amazon tied at 10 percent each.

"The growth of legal digital music downloads, and Apple’s success in holding that market, has increased iTunes’s overall strength in the retail music category," said Crupnick.

"But the importance of the big box retailers shouldn’t be dismissed, as long as the majority of music consumers continue to buy CDs."