Demand For Music Down In Q3; Paid Downloads Grows A Mere 2 Percent

This story was written by David Kaplan.
The percentage of internet users who bought a CD in Q3 fell to 22 percent from 25 percent last year, according to an online survey by market researcher NPD. Oddly enough, that's still better than the 15 percent of web users who paid for a music download last quarter. Both figures show why overall demand for music by internet users was down 2 percent in Q3.

Online grows, albeit slowly: To be fair, online is at least still growing, while physical purchases are still tanking. The slightly wider use of online music stores like iTunes and Amazon's provided a small boost to the category over last year In Q307, 13 percent of the internet population bought music from a download store, meaning a 2 percent increase in the growth rate. In general legal music download volumes grew by 29 percent in Q3.

P2P still a favorite: The number of Internet users sharing music on P2P sites held steady at 14 percent in Q3. However the volume of music shared via P2P sites grew by 23 percent, as P2P users reported downloading more files. Teens purchased 34 percent more paid digital downloads compared with year-ago. The growth in P2P file downloading was acute among 13- to 17-year-oldsup 46 percent. NPD pointed out that sharing files by burning music to a CD fell 25 percent among teens, suggesting that physical discs hold little appeal even when it's being given away for free.

Thanks to Rock Band: NPD's survey of 4,400 online users in Q3 also found that 22 percent of music buyers (including CDs, digital or mobile) overall played a music-related video game, such as Rock Band or Guitar Hero, indicating that video gaming may be the one hope for the music to try to make some money from a deeply troubled business. Release

By David Kaplan