May 9, 2007, 12:00 AM

Downloading keeps the music business in turmoil, says a new Ipsos report

Only 51% of consumers age 12 and older purchased a CD in the past six months, down from 60% five years ago, reports Ipsos Insight. 14% of the U.S. population age 12 or older have paid a fee to download a digital music file in the past 30 days, it says.

 

The digital music revolution hasn’t quite taken over the recorded music industry, but it’s creating chaos and forcing executives to improvise as they seek ways to stay connected with music fans. The latest evidence: Only 51% of consumers age 12 and older purchased a CD in the past six months, down from 60% five years ago, reports research company Ipsos Insight’s TEMPO: Keeping Pace with Digital Music Behavior.

Meanwhile, the proportion of consumer buying CDs off the Internet increased, Ipsos reports. The company also reports that 14% of the U.S. population ages 12+ have paid a fee to download a digital music file in the past 30 days.

For favorite artists, though, the CDs remain the favored format. 62% of US consumers who downloaded music purchased a physical CD of their favorite artist’s last release versus 28% who paid to download one or more individual tracks. At the same time, consumers like to sample music, even from favorite artists before buying a CD. 45% of digital music buyers bought a track from a new album before they bought the CD.

“Given the persistence of physical CDs as a means of music acquisition among current music downloaders, one might ask how music sales can be down over 20% since 2000,” says Matt Kleinschmit, vice president of Ipsos Insight and author of the TEMPO program. “Data suggest that the answer lies in what could be referred to as the ‘impulse gap’. Namely – that 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. 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."

Ipsos also reports that use of digital channels is high. 51% of music downloaders aged 12+ pay for digital tracks a la carte, 35% pay to download ringtones, 13% pay to subscribe to satellite radio and another 13% pay for online music subscriptions.

As consumers continue to use additional avenues of digital music acquisition, spending on physical CDs is likely to continue to decrease, Ipsos says. When asked how other channels of acquisition affected their spending on physical CD purchases, 40% of subscribers to online music services, 38% of a la carte downloaders, 25% of satellite radio subscribers and 17% of mobile music consumers indicated that their spending on physical CDs has decreased.

 

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