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US versus UK CD sales

Posted By Barry Ritholtz On January 7, 2005 @ 11:56 am In Music | Comments Disabled

The 2004 numbers are now out for CD sales in the U.S., and they are rather interesting: U.S. CD sales rose by 2.3% in 2004; It was the first rise in four years, but far below the 8% year over year gains we saw in the first quarter of the year.

The CD format still accounts for 98% of the 666 million albums sold, according to research company Nielsen Soundscan. A total of 140 million digital tracks were legally downloaded last year, equivalent to 14 million albums . . . By the end of the year, purchased downloads reached a weekly high of 6.7 million tracks, up from 300,000 in mid-2003.

Among the top 5 selling U.S. CDs were Usher (#1) and Eminem (#3) — both heavily downloaded on P2P networks.

It gets even more intriguing when you compare music industry results here in the States with those in Great Britain: "The UK enjoyed a record year for album sales in 2004, with 237 million sold in the 12 months up to September, an increase of 3%."

Note that the U.K. population is 60 million people, while the U.S. has under 300 million people. With a population only 20% the size of the United States, the British buy 37% as many CDs as we do. On a per capita basis, U.K. music fans consume nearly twice as many CDs as do their U.S. counterparts

Why is that? How is it that they are setting records — despite vibrant broadband penetration, and widespread access to P2P services — while the U.S. remains far below 1999 levels?

I suspect three factors:

A more vibrant, less consolidated broadcast radio music scene (No Clear Channel Radio);

Less mass produced corporate McMusic so prevalent on the radio in the States — from Ashlee Simpson to insipid Boy Bands;

A robust economic expansion. The U.S. ’90s bubble was far more muted in the U.K., so its after effects are also less insidious.

It doesn’t take much digging to see that the claims of the music industry re: P2P have been greatly exaggerated…


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