Music industry woes

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CDs still account for 85% of (legal) music purchases — though that percentage shrinks when you include the one billion illegal downloads that occur each month (source: media measurement firm BigChampagne LLC).

And digital music sales from sites like iTunes are not making up the shortfall:

Digital sales of individual songs this year have risen 54% from a year earlier to 173.4 million, according to Nielsen SoundScan.

But that’s nowhere near enough to offset the 20% decline from a year ago in CD sales to 81.5 million units. Overall, sales of all music — digital and physical — are down 10% this year.

And even including sales of ringtones, subscription services and other “ancillary” goods, sales are still down 9%…

Of course the irony here is that Apple has sold 100 million iPods, so music plays an important role in people’s lives — but it’s clear there are too many ways to get that music for free, either on the Internet, or borrowing and ripping CDs from family and friends.

The music industry will have to find new ways to make money other than CDs — that gravy train is over, so on to other revenue sources like live concerts, merchandising and advertising deals.

From the Wall Street Journal (subscription required).

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