Last updated: January 5, 2011 7:13 pm

Digital downloads fail to counter CD decline

Sales of music albums in the UK continued to fall in 2010, as a surge in digital album sales failed to offset the decline in CD sales.

The data from the Official Charts Company highlights the continuing transformation of the music market, as consumers migrate from CDs to digital downloads and free music streaming services.

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According to the OCC, a joint venture between the BPI, which represents rec­ord labels, and the Entertainment Retailers Association, total album sales fell 7 per cent in volume last year to 119.9m units, down from 128.9m in 2009.

Within that, sales of digital albums actually rose 30.6 per cent, to 21m from 16.1m in 2009. However, the jump in digital purchasing was not enough to counteract the sharp fall in physical album sales, which included a 12.4 per cent drop in CD sales to 98.5m.

The figures help explain the gruelling conditions faced by retailers such as HMV, whose traditional source of revenue has been hit as music-lovers shun record shops in favour of digital music on their computers and mobile phones.

The market for music singles provided a bright spot in the data, rising to an all-time sales volume high of 161.8m in 2010. The increase was driven by a 6.6 per cent jump in sales of digital singles to 158.6m, up from 148.8m in 2009. Digital sales now account for 98 per cent of the total UK singles market, with about 70 legal digital music services operating in Britain, including Spotify, last.fm and we7.

“2010 showed that the digital singles highs seen in the previous two years were no fluke,” said Geoff Taylor, chief executive of the BPI. “Music fans continue to embrace the convenience, value and choice offered by legal download stores.”

The BPI said it was too early to report how the rise in digital and fall in physical sales had affected record company incomes for 2010, with the OCC figures showing only the volume of music sold.

However, the increased demand for digital singles is unlikely to stem further declines in record label revenues, as digital tracks are priced significantly lower than their physical counterparts: the average digital track cost 82p in 2010, compared with the average price of £3.54 commanded by CD singles at their peak in 2002.

The BPI also argued that piracy continued to eat into the legal market for music. In December, the lobbying group said that three-quarters of digital music tracks acquired in the UK in 2010 were downloaded illegally.

According to research commissioned by the BPI, between 6m and 8m people turned regularly to internet piracy for their music last year.

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