US CD Purchases Down as Downloads Up, but ‘Favorite Artist’ CDs Do Well

May 2, 2007

This article is included in these additional categories:

Media & Entertainment | Retail & E-Commerce

The proportion of Americans who say they have purchased CDs in the previous six months has dropped some 15% since 2002, according to recent research from Ipsos‘s TEMPO: Keeping Pace with Digital Music Behavior.

Though that decrease is largely attributable to shifting consumer behavior toward digital music acquisition methods, a majority of American music downloaders continue to purchase CDs by their favorite artists while they frequently rely on music downloading for sampling new and unfamiliar music, according to the Ipsos study.

Some key findings from the most recent TEMPO research:

  • Half (51%) of U.S. consumers age 12 and older said they had purchased a physical CD in the previous six months – a decline of roughly 15% since 2002, when approximately 60% of consumers reported doing so.
    • Overall CD purchasing has declined in recent years, but the proportion of Americans purchasing physical CDs via the internet has increased
    • The average number of CDs purchased in the previous six months is nearly three (2.8), and the average total number of CDs owned is 78.
    • Teens own the fewest CDs (32, on average); consumers age 18-54 own many more (100 or more, on average).

ipsos-cd-purchase-behavior-2002-2006.gif

  • For new releases from a favorite artist, physical CDs remain the primary method of acquisition among US music downloaders age 12 or older.
    • 62% purchased a physical CD of their favorite artist’s latest release, versus just 28% who paid to download one or more individual tracks.
    • Among those who acquired music from this release via more than one channel of acquisition (8%), downloads of singles were most likely purchased first by 45% of these consumers, while only 27% purchased the CD first.
    • When examining purchases of new music by unfamiliar artists, 23% said they had purchased one or more digital tracks from unknown artists, but just 17% purchased the full-length CD.

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“Given the persistence of physical CDs as a means of music acquisition among current music downloaders, one might ask how music sales can be down over 20% since 2000,” said Matt Kleinschmit, vice-president of Ipsos Insight and author of the TEMPO program.

“Data suggest that the answer lies in what could be referred to as the ‘impulse gap.’ … Where in the past someone may have purchased a CD from a new or unfamiliar artist on a whim, they are increasingly more likely to digitally sample the music before deciding to make a full physical CD purchase.”

The Shift from Physical to Digital Acquisition

The decreased revenue for recorded music is being driven by concern with total spending rather than downloaders’ experimentation with digital acquisition, according to TEMPO research.

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Use of digital channels is certainly high: Half (51%) of US downloaders age 12+ pay for digital tracks a la carte, 35% pay to download ringtones, 13% pay to subscribe to satellite radio and 13% pay for online music subscriptions.

However, spending on those methods pales in comparison with spending on physical CDs: Downloaders spent an average of $14.00 on a favorite artist’s CDs, but among those purchasing other SKUs, just $3.60 was spent on digital tracks, $4.80 on over-the-air mobile track downloads, $4.90 on ringtones and $5.30 on ringbacks.

Still, digital copies of the full-length album averaged $10.00, considerably lower than physical CD spending. Moreover, only a handful of consumers bought music from the album using more than one channel (8%) – with average total spending only $10.90.

As consumers continue to use additional avenues of digital music acquisition, spending on physical CDs is likely to continue to decrease. When asked how other channels of acquisition affect their spending on physical CD purchases, 40% of subscribers to online music services, 38% of a la carte downloaders, 25% of satellite radio subscribers and 17% of mobile music consumers said their spending on physical CDs has decreased.

“Downloading alone cannot fill the dollars lost by the ‘Impulse Gap’ in CD sales,” Kleinschmit said. “Other new and innovative music products must also help to fill this void. Most notably, mobile offerings – ringtones, ringbacks and full-song over the air (OTA) downloads – have shown particular promise among youth, a market segment…highly impulsive in their music purchase habits.”

“The mobile channel is particularly well-positioned given the presence of an established billing relationship and an often captive, commuting consumer base that is perfectly poised for instant gratification and impulse purchasing,” he added.

Methodology: Data on music downloading behaviors was gathered from TEMPO: Keeping Pace with Digital Music Behavior, a quarterly shared-cost research study by Ipsos Insight examining the ongoing influence and effects of digital music in the US. A survey of those 12 and older among a representative sample of the general US population took place between December 14 and 21, 2006 via telephone interview and included 1,110 consumers. Also, a web-based survey of 1,550 US downloaders age 12 and older took place between February 9 and 20, 2007.

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