Digital sales gains over physical in 2011

According to data released July 7 by Nielsen SoundScan, the sales tracking system for music, published by Billboard magazine, digital albums now account for 27.4% of music purchases, up from 21.5% at the same point last year.

The report indicated that physical album sales continued to decline while digital album sales grew during the first six months of 2010. This confirms indications in a June survey by Pricewaterhouse Coopers, "Entertainment and Media Outlook for 2010-2014."

Pricewaterhouse Cooper projects that digital sales will overtake physical purchases next year. Consumers' use of digital platforms is ahead of industry estimates, hitting all segments of entertainment and media, including music, movies and videogames.

One of the Big 4 accounting firms in the world, it released the report as part of the company's management consulting and advisory lines of business. It did five-year forecasts covering 48 countries.

The research indicates that by 2014 digital purchases are projected to rise to $17 billion, doubling from $8.1 billion in 2009. Physical sales will dip $10.9 billion by 2014, a decline of 66% from 2005.

Overall, SoundScan states that album sales (physical and digital) are down 11% so far this year, with 154 million sold. Physical albums declined 17.7%, while digital albums rose 13.7%.

Interestingly, vinyl LPs have increased by 9.1% (1.3 million sold).

Head of analytics for Nielsen Entertainment, David Bakula told Variety, "Strong releases in 2010 have helped to slow the decline of new album sales." That includes albums by Eminem, Justin Bieber, Lady Antebellum, Lady Gaga, and Sade have each sold more than a million copies each so far this year, and Lady Antebellum's 'Need You Now' sold more than 2.3 million albums.

The Pricewaterhouse Cooper report asserts that declines in most entertainment purchases in 2009 were due to the economic recession, but a growth rate is forecasted at 5% through 2014, reaching $28.9 billion.

The Asia Pacific region and Latin America will be particularly strong.

The analysis of global data states that anti-piracy measures by governments will help stabilize the industry. It also forecasts new online services will generate subscriber and advertising revenue, shifting global music sales by 2013.

http://www.pwc.com

RC