NPD: Digital music sales consistent growth

PORT WASHINGTON, N.Y. According to NPD, while CDs remain the most popular format for paid music purchases, digital music sales are making up an ever-greater share of U.S. music sales. CDs comprised 65% of all music sold in the first half of 2009 compared to paid digital downloads, which comprised 35% of music sales. By comparison, paid digital music downloads comprised just 20% of sales in 2007 –- growing to 30% of the music market last year.

“Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products,” said Russ Crupnick, VP of entertainment industry analysis “But with digital music sales growing at 15 to 20%, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010.”

According to NPD MusicWatch, when it comes to the unit-sales volume of music sold at retail – including paid digital music downloads and CDs -- Apple iTunes leads in the U.S. with 25% of music units sold, which is up from 21% in 2008 and 14% in 2007. Walmart remains in second position with 14% of music volume sold at their stores and Web sites with Best Buy ranked third.

iTunes also continued to solidify its lead in the digital music arena, as consumer downloads from iTunes comprised 69% of the digital music market in the first half of 2009, followed by AmazonMP3 at 8%. Walmart leads all sellers of CDs with a 20% share of the physical music market, followed by Best Buy at 16% and Target and Amazon tied at 10% each.

“The growth of legal digital music downloads, and Apple’s success in holding that market, has increased iTunes’s overall strength in the retail music category,” said Russ Crupnick, entertainment industry analyst for NPD. “But the importance of the big box retailers shouldn’t be dismissed, as long as the majority of music consumers continue to buy CDs.”