Music fans have gone digital in a big way. It used to be that a music collection spanned numerous CD cases. Today, even the largest music collections can be stored on a single MP3 player. With the massive growth in digital music sales, the music industry is seeing profits drop significantly.
Reuters reports that statistics released this week by Nielsen SoundScan show that 2008 was the worst year for music sales since 1991 when the firm began monitoring the category. The numbers show that total album sales fell 14% over the year with 428.4 million units sold during the 52 weeks ending on December 28.
According to the figures, sales have dropped 45% from the highest point seen by the industry in 2000 when 785.1 million albums were sold. According to Reuters, the biggest reasons for such a precipitous drop are music pirates and other forms of entertainment like video games. The global recession also accounted for some of the loss in sales.
Digital track sales though retailers like iTunes grew 27% to 10.7 billion units sold. The growth rate is less than the 45% increase seen in 2007 so growth in digital track sales is slowing. Ringtones were important this year and sales of the top 100 mastertone ringers dropped 33% to 43.8 million units. Only one of the mastertone's broke the 2 million sold mark -- Lil Wayne's "Lollipop".
The rapper also took the award for year's best selling album with 2.9 million units of his "The Carter III" sold. Taylor Swift sold the most albums total this year with 4 million copies of her album "Fearless" and her debut album sold over the year.
Despite the slowing, but continued growth in digital music sales, the lower margin digital tracks are unable to make up the money lost to declining physical medium sales. Some of the biggest record labels have bet on the new slotMusic format to help resurrect physical medium music sales.