As a music fan, I've chosed to purchase most of my music online over the last few years. I'm not alone - the charts above displays that. The market share of digital music retailers has increased rapidly. Digital retailers now account for over 35% of all music sales.
iTunes is totally dominating the market, even if there are some competitors.
The most interesting fact is that the introduction of variable pricing by iTunes in April of this year brought on a dramatic increase in the number of monthly transactions per user, helping them to pass Wal-Mart as the leading music retailer.
We all know the music industry has been hurt by illegal downloads and that we are facing a bad economic downturn. Yet, the legal music downloads are growing with very healthy numbers.
How can this be?
Sometimes I get the feeling that it's the music industry that are very reluctant to technical change and very good at letting the rest of the world know they are. Think about it. There has been plenty of examples of technical changes for music consumtion. Not all welcomed by the music industry - 45s singles gave way for LPs, then came the introduction of FM Radio, audiotapes, Walkman, CDs, iPod and streaming Internet downloads, to name a few.
The music industry always claimed that introduction of new technologies like FM radio, Audiotapes, CD:copies or illegal downloading from the Internet, would kill the music industry. And at the industry needed to be compensated for their lost sales due to new technology.
New technology never killed music. All it does is to create a new market and new opportunities. Since there always will be technical development and consumers will use the technology of their liking to consume music, the real challenge for the music industry will be to understand how to make money out of the new market.
And they are learning. The digital singles market in the UK exploded this year. The 23:rd of October 2009 - The British Recording Industry reported.
"Driven by a strong release schedule and a burgeoning range of online music services in the UK, new data from the Official Charts Company shows that sales of single tracks in 2009 have now surpassed the previous all-time record of 115.1m, set in 2008. The total of 117m has been reached with 10 weeks of trading, including the vital Christmas period, still to run in 2009."
Retail sales of singles by format
Physical Digital Total Sales
2002 43.9m - 43.9m
2003 30.8m - 30.8m
2004 26.5m 5.7m 32.2m
2005 21.4m 26.4m 47.8m
2006 13.9m 53.0m 66.9m
2007 8.6m 77.9m 86.5m
2008 4.9m 110.2m 115.1m
2009 YTD 1.6m 116.0m 117.6m
What, did I just hear someone say - "The Boy Who Cried Wolf" !?