There seems to have been surveys galore this past week or so with more studies in the USA last week pointing the finger squarely at illegal downloaders for the aledged ‘downtown’ in sales of music at bricks and mortar stores. Researchers from the National Bureau of Economic Research reckoned that students bought less albums when they had access to P2P Networks.

Back in the UK, research firm TNS surveyed the entertainment spending habits of 10,000 consumers across the UK. They reckon the number of people downloading music, and buying CD by internet mail order sites, has
increased greatly in the last year. Perhaps more importantly, the web savvy music buyers are spending less than half the amount of money they would have done previously in high street record shops like HMV and Virgin Megastore.

The study estimates that UK consumers who download music spent 37% less on CDs in-store in 2004 than they did in 2003. The report suggests that digital download services could soon begin to significantly affect profits at traditional music retailers. According to the report, UK consumers typically purchase more music now than in the past, but spending has decreased since tracks are cheaper online and can be purchased on an individual basis.

TNS admit the downloading community is still relatively small compared to the overall music market (they reckon around 300,000 consumers were legally downloading music this summer) . While the amount of music they are buying has grown, the amount they typically spend has shrunk because tracks are significantly cheaper online and can be bought on an a la carte basis rather than having to shell out for a complete CD.

Ian Waymark, service director at TNS Audio Track said “Whilst traditional music retailers still hold the vast majority of the market, the rapid growth of downloading cannot be ignored. As downloading popularity increases, traditional retailers will have to find new ways of tempting customers to keep spending with them.” Virgin has outlined ambitious plans for a comprehensive online site together with digital download posts in stores something Richard Branson has been talking about since 1999. In the USA, Echo, a joint effort between retailers launched with a splash of publicity in early 2003, was supposed to give the big brick-and-mortar retailers such as Best Buy and Virgin Megastores an online foothold that would help them beat back file-swapping services and digital stores.

Related Reading

Downloading To Blame (Again) [MusicBizNews24.com]
Music Piracy Does ‘Hit Cd Sales’ [BBC News]
Digital Music to Replace CD in 10 Years? [MusicbizNews24.com]
Pop Singles Spin Back to Life in Digital Era [the Telegraph.co.uk]
The Tide Is High But They’re Holding On: Are Traditional Music Retailers in the UK All Washed Up? [MusicTank.co.uk]
BPI Quarterly Market Review-August [BPI.org] 4pg PDF
UK Music Retailer Hails Boom [MusicBizNews24.com]
The CD Roars Back From the Dead [the Register]
iTunes Europe Boasts Over 750,000 Downloads in First Week [MusicbizNews24.com]
Music Stores Face Uncertainty [BBC News]
Big Music Stores Squelch Download Plan [CNet News]
Music Retailers Competing On Price [Big Picture]
Music Sales Rise on Aggressive Discounting, Price Competition and an Improving Economy [Big Picture]

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