Album sales plunge in '07 as digital growth slows

Thu Jan 3, 2008 7:21pm EST
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By Dean Goodman

LOS ANGELES (Reuters) - If only Christmas came a few times a year for the fast-fading U.S. music industry.

Total album sales plunged 15 percent in 2007, and retailers waited until October for the year's top release, California tenor Josh Groban's holiday-themed "Noel," according to sales data issued on Thursday by industry tracker Nielsen SoundScan.

Sales of physical and digital albums tumbled to 500.5 million units, as the music industry was pillaged by piracy and competition from other forms of entertainment like videogames, industry experts said.

It marked the lowest tally and the steepest decline since Nielsen began publishing estimates based on point-of-sales data in 1993, a spokeswoman said. The peak year in that time was 2000, when sales reached 785 million units.

Album sales on the Web rose 2.4 percent to 30.1 million units, but that was down from a 19 percent jump in 2006.

Overall sales -- including albums, singles, and digital tracks -- rose 14 percent to 1.4 billion units, also down from a 19 percent rise in 2006. The main driver of growth was a 45 percent jump in digital track sales to 844.2 million units. But even then, the pace slackened from 65 percent in 2006.

Things are likely to get worse for the next four or five years, said music attorney Kenneth Kraus, a Nashville-based partner in Loeb & Loeb, whose clients include Kid Rock and Carrie Underwood.

He said the music industry wasted too much time and goodwill battling digital distribution of music, and "we've lost a whole generation of kids" who grew up downloading free music from the Web and cannot fathom paying for it.   Continued...

<p>A woman and her daughter who are tourists shop for music CDs at a Virgin Megastore in Times Square in New York in this file photo from Nov. 21, 2007. REUTERS/Jacob Silberberg</p>