Plunge in online music sales blamed on file sharing
By Dawn C. Chmielewski
Mercury News
Online sales of music CDs are plummeting three times as fast as traditional retail CD sales, another sign of the corrosive impact of file-sharing services on record sales, a New York research group reports today.
A comScore Media Metrix study reveals that while traditional retail music sales are off 6 percent for the first half of the year -- online sales fell 20 percent over the same period. And the pace is accelerating, with sales down 12 percent in the first quarter of the year -- but declining 39 percent in the third quarter.
Peter Daboll, division president of comScore Media Metrix, said many factors contributed to the decline -- including a weak economy and fewer hit songs. But the greatest effect is linked to the increasing popularity of online file-sharing and computer CD-burners.
Since the collapse of pioneering file-swapping service Napster, consumers have quickly flocked to alternatives such as Kazaa and Morpehus. Kazaa, the reigning king of song-swapping, has more than 10 million users in the United States alone -- a 20-fold increase since comScore first began tracking usage in June 2001.
The Recording Industry Association of America, the labels' Washington, D.C., trade group, said the study reaffirms what it has been saying all along -- that piracy undermines the marketplace for legitimate, online music.
``All legitimate businesses online have an incentive to fight piracy,'' said an RIAA spokesman, Jonathan Lamy. ``Obviously, as this study shows, it affects everyone.''
Daboll said the collapse of online CD sales could be a bellwether of further sales erosion at traditional retailers, like Tower Records or WalMart.
``Online sales seem a leading indicator of what's going to happen offline,'' Daboll said, whose research group monitors the online activity of 1.5 million Internet users.
Some leading Internet retailers disputed the comScore numbers -- saying that while online CD sales are down roughly 20 percent from the same time last year, ``it's not the god-awful gap that they're predicting.''
CDBaby, of Portland, Ore., the second-largest online retailer of independent artists, said its sales have doubled since last year. And it expects a seasonal spike in sales as the holidays approach.
John Steup, CDBaby's vice president and director of operations, said the comScore study could reflect consumer backlash against mainstream music, and the rise in popularity of unsigned bands playing the local clubs.
``People are buying what they're living,'' said Steup. ``They're not buying the tripe on the radio.''
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