ALBUM SALES WAY DOWN IN ’08; UNSURPRISINGLY, RECORD BUSINESS MORALE ALSO DOWN

Album sales in the United States have taken a big dip so far in 2008; according to Nielsen Soundscan [via Digital Music News], aggregated physical and digital album sales dropped 11% from the same period in 2007.

Though digital album sales are up 34% from a year ago and comprise 15% of the overall album market, the jump is not nearly enough to make up for lagging physical sales. Making matters worse (for the record industry, anyway), single digital track downloads moved up 30% to 524.7 million units. While this may seem encouraging on the surface, the record industry is losing money on the lower profit margins that digital singles offer compared to full albums.

What this means: no one wants to pay for music!! I can’t remember where I read this, but I recently saw that something like 40% of ISP bandwidth is used by illegal downloaders. But make it easy and affordable, and the people will come.

I’ve harped on this point in the past, but the record business needs to catch up if it hopes to survive. You can wax all you want about how those who steal are hurting the business — and you’re right — but the fact of the matter is, the CONSUMER determines value. This is a truism of all business. For so long the labels controlled the means of distribution and there was not a choice in the matter of price; but the Internet has democratized the playing field, and the consumers have spoken loud and clear that a CD is NOT worth $14.99. So, label folk: get with it! Introduce a subscription service, an all-you-can-eat buffet at an affordable monthly price, and the people will come flocking.

-VN