iTunes Becomes Number 2 Music Seller In U.S.

    February 27, 2008

The amount of music that consumers purchased in the U.S. rose by 6 percent in 2007, according to The NPD Group.

An increase in digital download revenues was not able to make up for the decline in CD sales, which resulted in a net 10 percent decline in music spending (from $44 to $40 per capita among Internet users).

iTunes Screenshot iTunes Screenshot
(Photo Credit: Apple)

NPD estimates that one million people abandoned the CD buyer market in 2007, led by younger people. Forty-eight percent of teens did not buy a single CD in 2007, compared to 38 percent in 2006.

The percent of the Internet population in the U.S. who used peer-to-peer (P2P) file sharing reached 19 percent last year, and the amount of files each user downloaded increased. P2P music sharing among teens continued to grow aggressively.

Music downloads now represent 10 percent of the music purchased in the U.S. Apple’s iTunes Music Store became the second largest music retailer in the U.S. after Wal-Mart, based on the amount of music sold during 2007.

Twenty-nine million people bought digital music legally through pay-to-download sites last year, which is an increase of 5 million over the previous year. Sales growth was primarily driven by the 36 to 50 year old demographic.

"The continued growth in legal download sites is encouraging, yet the industry struggles to improve the value of each digital customer," said Russ Crupnick, entertainment industry analyst for The NPD Group.

"With so many baby boomers and gen-Xers entering the market, there are certainly opportunities to sell more digital albums, promote older catalog titles, or create bundles that will raise revenues. In the near term that’s going to be the best means available to narrow the gap on dwindling CD revenues."