Digital Downloads Creating Headaches For Labels

Album sales for the first half of 2009 are down 15% from the same period in 2008.

Last Updated: July 8, 2009 @ 2:57 PM

The music industry’s turbulent ride in the digital age continues to get bumpier with mostly cloudy skies ahead.

Overall album sales continue to dip in the double digits while the number of singles being sold — generally at less than a dollar apiece — are not sufficient to replace the lost revenue brought in by albums.

Not only is the industry failing to create new stars, the hottest commodities in music right now are the songs of Michael Jackson.

And with a summer largely devoid of superstar releases — Daughtry’s second album and Whitney Houston’s comeback are the only likely million-unit sellers being released prior to Labor Day — retailers will be putting their efforts into selling the holy grail of all catalogs come Sept. 9, the music of the Beatles. 

Album sales for the first half of 2009 are down 15% from the same period in 2008 as the music business continues to look for help from the downloads of individual tracks.

Certainly the recession is contributing to fewer sales, but the top 10 of the first half of 2009 features only one new artist, Lady GaGa. (See top 10 chart)

Counting compact discs, vinyl LPs and downloaded albums, the tally for the first 26 weeks of the year is at 174.5 million units, down from 204.6 million in the first half of ’08. Last year’s figures were down 11% from 2007.

Four years ago, the first 26 weeks saw sales of 298.4 million albums; this year’s tally is down a staggering 42% from 2005.

While the appetite for individual albums continues to decline, the sales of individual downloads continues to rise. In the first half of the year, 613 million tracks have been sold, a 13% spike from 2008’s 514.7 million tracks.

Over the last four years, nearly every week has seen an increase in digital downloads from the same week in the previous year.

The last week of the current session, which ended Sunday, would have actually seen a 1% dip fro 2008 were it not for the sale of 2.66 million tracks by Michael Jackson and the Jackson 5.

Unlike last year, when Lil Wayne’s "Tha Carter III" topped 1 million in sales in its first week, there is no breakout hit. Half of this year’s top 10 are holdovers from 2008, led by Taylor Swift’s "Fearless," which has sold 1.3 million copies this year.

The soundtrack to "Hannah Montana: The Movie" is the top seller of albums released in 2008, having just edged Eminem’s "Relapse."

The rest of the top 10 is Lady GaGa "The Fame" (976,000); soundtrack to "Twilight" (971,000); U2’s "No Line on the Horizon" (939,000); Nickelback "Dark Horse" (912,000); Rascal Flatts "Unstoppable" (825,000); Beyonce’s "Sasha Fierce" (809,000); and Dave Matthews Band "Big Whiskey and the Groo Grux King" (689,000).

For a full analysis, though, one has to look at how well each artist’s music is performing across all platforms.

Lady GaGa, for example, has sold less than 50,000 more copies of her album than U2. But on the digital tracks side, she is at 9.3 million vs. U2’s 311,000.

Eminem has a low percentage of digital album sales (16%), but his digital tracks sales are quite strong at 3.1 million. More than 28% of the Dave Matthews Band title has been sold digitally, but the album’s track have only sold 355,000 copies.

Last year, Universal Music Group had the top three seller; this year three of the top six titles are on UMG labels. Considered the largest of the Big Four, Universal has a market share of 31.5% followed by Sony Music Entertainment (25.5%), WEA (20.9%) and EMI (8.6%). Independents not owned by the majors make up 13.5% of the marketplace.

The sale of vinyl — a good 70% of it from rock and alternative rock titles — continues to grow, hitting 1.2 million units in 2009, up from 803,000 the year before. Last year’s number was double that of the first half of 2007.