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US music CD sales plummet 20% from January to March

US sales of music CDs plummeted 20 percent in the first three months of the year as downloading of songs continued to knock the underpinnings from record studio revenues.

Eighty-nine million CDs were sold from the start of the year through last Sundays as compared with 112 million CDs sold during the same period last year, figures released on Wednesday by industry tracker Nielsen SoundScan showed.

Purchases of digitized albums online failed to make up the difference -- instead they dropped from 119 million during that time period last year to 99 million during the first three months of this year, SoundScan reported.

Meanwhile, sales of individual songs in digital format on the Internet rose from 242 million tracks during those months last year to 288 million this year, SoundScan reported.

Consumers are sending a message to artists that "while you may have put a lot of thought into the sequence of the album, I only like these three songs," digital music industry analyst Michael McGuire of Gartner Research said.

"It comes back to consumers being in complete control of their media experience, and that is not going backwards," Gartner told reporters while discussing the sharp drop in album sales and the rise in single-song track purchases.

"This is a tough business being a record label because they have to find new sources of revenue," he said.

Overall album purchases, calculated by considering every 10 track sales the equivalent of an album, were down by 10 percent in the first quarter this year from last year when 131 million albums were sold, SoundScan figures showed.

Music industry statistics show that CD sales have declined steadily for more than five years but still account for 90 percent of album purchases.

The relentless popularity of digital music downloads on the Internet is taking the legs out from under CD sales and leaving studios with nothing to stand on if they fail to adapt to online distribution, McGuire said.

"The last couple of years the music industry didn't move fast enough and they are trying to catch up now," McGuire said.

"But, the whole digital thing is a train that is picking up speed," he said.

EMI and Warner Music, two of the world's four major studios, are quickly investing in online "search, discovery and recommendation" tools such as Web sites at which users share song playlists and recommendations, McGuire said.

Instead of letting CD sales erode as they warily eye online forms of distribution, studios should turn the Internet to their advantage, McGuire said.

Online communities can be courted and members given easy paths to Web sites or real-world stores where music can be purchased.

"The imperative is for studios to find as many frictionless transaction paths as possible for digital content," McGuire said. "An important component is embracing discovery tools on social networks."

Protecting music from piracy is an unavoidable burden of online song distribution.
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