Recording Industry Releases 2008 Sales Statistics
The Recording Industry Association of America (RIAA pdf) and the International Federation of the Phonographic Industry (IFPI pdf) both released statistics for 2008 sales. As expected, the numbers show that physical sales continued to drop in comparison to 2007, but digital sales grew to nearly 30 percent of the total market, and digital performance rights royalties went up 74 percent.
The poor physical sales don’t apply to the vinyl format, which sold $57 million, its highest mark since 1990. However, consumers are opting to buy digital albums and track downloads, which are cheaper per sale, instead of CDs. So even if the total number of digital sales is greater, the resulting profit for the industry is lower.
As digital sales try to compensate for the lost money in CD sales, the potential value of performing rights should go up this year. Music streaming on sites like Last.fm and Pandora are emerging online every day, and the growth of performing rights royalties since 2007 can be an indication of the next trend in music distribution. All the recording industry needs to do is streamline the negotiation of deals with the aforementioned websites. Delayed deals only make survival more difficult for streaming services that rely on short-lived venture capital and must quickly develop user communities to generate revenue.
The industry is making less money, but digital sales have benefits. For example, labels and distributors should be able to cut costs on manufacturing, storing and distributing physical product. Digital distribution is simply more efficient, and if the revenue stream is turning out to be less, then the recording industry will have to become smaller in size.
If the major labels contract, does that necessarily mean less music for the consumer? Do the numbers affect indie labels similarly, or do they level the playing ground?