12 MusicWeek 13.04.12
BUSINESSANALYSIS Q1 SALES EDITORIAL
Don’t jump to conclusions – but take comfort from US trends
THE TRANSFER OF ALBUM SALES from CD to digital has been going on now for several years, but it has not happened quite so quickly previously as it did in Q1. In the same period last year around one in five albums
sold in the UK was digital. Just 12 months later that share rose to nearly one in every three, a startling jump in such a short space of time and undeniable evidence that consumers do still want albums in the digital age and not just individual tracks. Behind that jump in market share for digital albums, though,
is more than just an increase in the popularity of downloads. You also have to consider the collapse in the quarter of CD sales, which dropped by an alarming 25.4% compared to the first quarter last year. The CD albums market has been declining for quite some
time now, long before digital albums really started to matter, but the kind of percentage drop that occurred between January and March is unprecedented and suggests the switch from CD to download among consumers is now accelerating. That was certainly how things played out in the States, getting to a point where digital across all aspects of recorded music made up more than half of the business for the first time last year. There CD album sales plummeted as digital grew and grew, although the CD market in the US began to stabilise last year, dropping a fairly modest 5.7%, while rising download sales helped the total albums market increase in annual terms for the first time since 2004. On the face of it there appears to be something similar now
happening in the UK, although caution should always be advised against drawing too many conclusions from one quarter’s set of data. As will be a recurring theme no doubt throughout this year,
we also have to take into account Q1 2012’s figures were competing against an exceptional first three months of 2011 when Adele’s 21 sold nearly 1.8 million copies. A good chunk of those sales were achieved on CD, making it almost impossible for the following year’s same quarter to come anywhere near competing. While the “Adele effect” has to be a consideration when
assessing year-on-year comparisons, at the same time we must not get too carried away by it as trying to explain away why the market was down so much. Even if you strip out all of Adele’s contributions from the calculations, the albums market was still down 9.2% in Q1, clearly a better result than the actual drop of 14.7%, but a very uncomfortable result all the same. This year will no doubt be a very challenging one for the
albums market and we may well have to get used to some more nasty year-on-year comparisons during the remaining nine months of it. But if we are experiencing the kind of falls off a cliff for CD album sales as the US previously did, we can also take some comfort from the fact that also ultimately led to the overall albums sector there moving back into the black as digital filled the gap. Paul Williams, Head of Business Analysis
Do you have views on this column? Feel free to comment by emailing
paul.williams@intentmedia.co.uk EXECUTIVE SUMMARY
Albums sales down 14.7% year-on-year to 23.0 million as the CD market shrinks by more than 25% Digital album sales account for a record 33.1% of the market after rising 19.6% on the year to 7.6 million Compilation sales back in black after 19.3% drop a year ago with 0.4% rise lifting Q1 market to 3.9 million units Singles market grow by 4.4% to 46.7 million with Gotye featuring Kimbra’s Somebody That I Used To Know period’s top seller Adele’s 21 sells another 411,997 copies to break through 4 million cumulative barrier and become Q1’s top seller
ALBUMS SALES BY PAUL WILLIAMS
T
he album market’s gradual evolution from physical to digital threatened to turn into a revolution in quarter one as the CD endured
its worst sales collapse yet. Having fallen in unit terms by 12.6% across the
whole of 2011, according to Official Charts Company data, the format suffered a drop more than double that size during the opening three months of 2012 with the market down 25.4%. That added up to 5.2 million fewer CD albums having been sold compared to Q1 last year, taking the sector down to 15.3 million units. Labels and retailers have long got used to
quarterly and annual CD album falls running into several percent or more with the format last year still making up 76.1% of all album sales in the UK. But this decline experienced between January and March was something quite different, suggesting the movement of the albums market from a physical to a digital one is now going at a pace not seen previously. Giving further evidence to that theory is the
continuing rise of the digital album, which increased its unit sales by 19.6% year-on-year in Q1 to 7.6 million units. It made up 33.1% of the albums market over the quarter, by far its biggest quarterly share yet and compares to a share of 23.5% for the
whole of 2011. However, while acknowledging the big drop in CD sales, BPI chief executive Geoff Taylor is cautious about drawing any firm conclusions about market trends from what has occurred in one quarter. “One should not try to identify that drop as a
significant factor. The causation is complex,” he says. “We’re seeing a softening of CD demand and a significant proportion of that is going into digital album growth.” The rise in digital album sales was both
encouraging and impressive but it only added another 1.2 million units into the market, a quarter of what the CD market fell by. The net result was a horrible 14.7% annual drop in all album sales, taking the market to 23.0 million units and prompting more urgency among retailers that if the industry wants the CD to survive it needs to act now before it is too late. Entertainment Retailers Association (ERA)
chairman Paul Quirk describes Q1’s 25.4% drop in CD album sales as “considerable” and notes: “We’ve been looking at doing something about the CD format for the last 18 months. It’s long overdue. It needs something to enhance it, to make it more popular, more collectible and something people will value because they don’t value it as much as they used to.” To try to realise this Quirk sales ERA has
teamed up with the BPI to undertake research into
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DIGITAL IS SPUR IN Some industry execs are refusing to draw conclusions about a
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