After nearly 5 years of full blown operation, the legitimate digital music distribution business seems to have failed to deliver the volume of sales that many in the industry have hoped for. The much trumpeted Apple effort with iTunes and the iPod have yet to deliver on the promise of digital music as a path to salvation for the recorded music industry.
According to Nielsen SoundScan, average weekly download sales as of November 27th fell .44% vs. the third quarter. That’s no growth at all.
According to a recent Bloomberg article, overall the numbers don’t support a exploding market.
"Digital music sales in the U.S., the world’s biggest market, have hardly budged in the past five months. They almost tripled to 6.6 million downloads a week in the year through May, and were at 6.7 million in the week ended Oct. 23, according to Nielsen SoundScan, a unit of Dutch media company VNU NV.
The iPod, with more than 28.2 million sold, isn’t providing the panacea that the music industry seeks. EMI Group Plc Chairman Eric Nicoli forecast in May that digital sales would help revive the $34 billion recorded music market. For now, they’re unlikely to offset falling CD sales that are causing global revenue to shrink for a sixth straight year.
Digital optimism seems to be crashing in on itself,” says Simon Baker, a media analyst at SG Securities in London, who has a sell” rating on shares of EMI, the world’s third- largest music company.
Downloads in the U.S. have alarmingly plateaued. This has devastating implications for predictions that digital sales would grow exponentially.’
The shares of EMI, whose roster includes Coldplay and The Rolling Stones, have dropped 20 percent this year to 212 pence in London. Warner Music Group Corp. Chief Executive Officer Edgar Bronfman Jr. has seen his company’s stock fall to $15.47, below its May initial public offering price of $17.
Music stocks have declined while Apple soared. Apple shares have climbed to $57.50 in New York from $9.50 in October 2001, when the iPod went on sale. Fiscal fourth-quarter net income at Apple, which also makes Macintosh computers, rose to $430 million from $106 million a year earlier, as it sold 6.45 million iPods, the company said Oct. 12. Revenue from iTunes Music Store and iPod accessories accounted for just $265 million of Apple’s $3.68 billion in sales in the period."