Online sales of recorded music have declined sharply for three consecutive quarters, comScore Networks Inc. reported today, while millions of Internet users continue to use online music file-sharing services. ComScore reports that 2002 online music sales through the third quarter were $545 million, down 25% from the $730 million in the same period last year. In fact, the decline in online sales of recorded music has accelerated throughout 2002, with sales declining versus year-ago by 12%, 28% and 39% in the first, second and third quarters. In contrast, online sales of all products (excluding auctions) increased 30%, 28% and 30% over the same three quarters.
At the same time that online sales of music have been declining, total music sales have fallen as well, as recently reported by PricewaterhouseCoopers for the Recording Industry Association of America. The RIAA reported in August that total U.S. music shipments dropped 7% in the first half of 2002 versus the first half of 2001 to $5.93 billion from $5.53 billion. Online sales of music fell 20% to $424 million from $531 million over the same period.
"The music industry attributes the decline in online and offline music sales to a variety of factors, such as a slow economy, fewer hit songs, piracy, CD-burning and file-swapping among others," said Peter Daboll, division president of comScore Media Metrix, a division of comScore Networks. "While a host of factors inevitably impact consumer behavior, the greater sales decline online as reported by comScore would suggest that Internet file-swapping and CD-burning are having a severe negative impact on music sales among Internet users."
After the fall of file-swapping pioneer Napster, U.S. consumers flocked to alternatives, including Kazaa and Morpheus, comScore says. Each of those two increased its average monthly U.S. home user base from less than 1 million in the second quarter of 2001 to 4.6 million and 7.1 million, respectively, in the first quarter of 2002.
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