Mixed results for online music in the US

NPD group, who analyse markets in return for money, have got some mixed results in their latest survey of music-buying by internet users:

[T]he number of internet users who paid for music increased by 8 million to around 36 million last year — purchased music downloads grew by 29 percent since last year, accounting for 33 percent of all music tracks bought in the U.S.

Well, that all sound positive, doesn't it? In the face of claims that people expect music to be free online, it turns out that more and more people are actually handing over their credit card details.

There is, though, a chill note:

Without CDs, it seems that many people are giving up on buying music entirely. In ‘08, the number of total music buyers fell by 13 million in the U.S. The decline in music buyers was led by a 19 percent drop in CD sales. Only 58 percent of web users said they bought CDs or digital music downloads last year, versus 65 percent in 2007.

So, in other words: people are shifting to downloads, and away from CDs. Hardly, you'd have thought, news that will come as any great surprise.

But why are people spending less on music? Turns out - and here's a funny thing - it's nothing to do with illegal filesharing. Nope, it's the recession. It turns out that while music industry executives may picture themselves as delivering an essential, new records or files are seen by the market as a luxury. Apparently, when times are tight, you might just listen to old CDs again instead of buying new ones.

Making the situation worse - from a sales point of view - is the increasing use of free, legal streaming services:

In the case of online radio company Pandora saw its recognition double, NPD says, as 18 percent of web users were able to identify it. The introduction of MySpace Music is also appears to be having an affect on listening habits, the study said. Social net climbed from 15 percent in Q407 to 19 percent in Q408. Nearly half of U.S. teens say they listen to music on social nets, which is an increase from 37 percent a year ago; among college-age web users, the percentage rose from 30 percent in ‘07 to 41 percent last year.

Well done, the US music industry - your attempts to shift people from illegal to legal sources of music seems to have had the side effect of turning audiences from people interested in acquiring music, to people who'll listen to it floating by instead. That... was what you wanted, wasn't it?