Myth of the Active Music Buyer - eMarketer
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Myth of the Active Music Buyer

Blame product or pirates, but spending is down.

September 12, 2007

Who's to blame for falling music sales? Illegal music downloaders? Internet radio consumers? Britney Spears?

Regardless of the cause, the music industry has largely seen declining music sales as a crucible. The theory was that although fewer people bought music, the remaining buyers were true fans, and that digital downloads would eventually compensate for falling CD sales. But even though sales are still declining, the music super-consumer has yet to emerge, according to Bridge Ratings data.

"An interesting finding is the steep increase in the percentage of the population that bought music in 2006 compared with the previous year," said Paul Verna, eMarketer senior analyst.

US Music Purchasers, 1980-2006 (% of population)

Yet the average price per purchase is being reduced by the large numbers of consumers buying single MP3 downloads.

The 30% drop in compact disc sales from 2000 to 2005 was too steep to be offset by digital sales. The 16% drop in CD sales from 2005 to 2006 was partially offset by digital download sales growth.

The net effect is still a falling average price per music purchase, decreasing overall music revenues.

eMarketer interpolated the Bridge data with US Census Bureau population estimates dating back to 1980. While the total number of US music consumers has more than doubled to 96 million in 2006 from 45 million in 1980, annual per capita music expenditures have dropped drastically to $120 in 2006, from $198 in 1980.

"In other words," Mr. Verna said, "a lot more people may be buying music these days, but they're spending a whole lot less, on average, than they did at any point in the recent or more distant past."

Annual Music Spending per Capita in the US, 1980-2006

Again, tabulating Bridge Ratings' percentages against Census Bureau statistics shows the track-driven download model pioneered by iTunes is broadening the universe of music consumers.

"That's good news for the industry," Mr. Verna said. "Even better news would be if today's consumers were spending at 1995 levels."

Learn how marketers will fit into the changing music landscape. Please read eMarketer's Global Music: Tuning Into New Opportunities report.

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