Digital sales surge fails to offset album decline

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The surge in digital music sales last year was not enough to offset a continued decline in overall album sales, according to figures released on Wednesday, highlighting the precarious state of the record industry and the risks associated with switches to digital distribution.

Over the last 12 months, sales of digital tracks rose 194 per cent to 352m units, according to Nielsen Soundscan, the entertainment consultancy. Digital album sales also posted robust growth, gaining 66 per cent to 16.2m units.

In spite of those increases, however, overall album sales slipped by 3.9 per cent in 2005, owing to a drop in sales of CDs.

The year-end results are another sign of the challenges facing the music industry. A slight rise in album sales in 2004 raised hopes among industry executives after a five-year slide, brought about by high prices and an epidemic of piracy.

Strong fourth-quarter results at Warner Music and EMI – both buoyed by digital sales – had also stirred optimism that the industry had found its footing in a new landscape. Digital distribution did set some records in 2005, with digital track sales reaching 19.9m units sold, the most ever and marking the first time another format has exceeded album sales, which totalled 16.8m last year. The figures show only the number of units sold, not the dollar value of units.

The Nielsen figures showed a drop in every music genre except Latin, where album sales rose 12.6 per cent.

The four largest music companies maintained their relative market positions last year. Universal Music maintained the top slot with 31.7 per cent of total album sales, up from 29.6 per cent last year. Sony BMG was second with 25.6 per cent, down from 28.5 per cent in 2004. Warner Music and EMI were roughly steady in terms of share of total album sales, at 15 per cent and 9.5 per cent respectively.

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