Digital music sales growth is slowing and could soon plateau, according to a Billboard analysis of 2009 SoundScan data. In terms of percentage and unit change, digital sales still increased last year, but to a significantly less degree than the previous two years.
To be sure, the changes are positive, not negative. But growth is disappearing. From 2006 to 2008, annual sales of digital tracks rose between 225 million and 229 million units. In 2009, unit growth fell to 90 million. A similar but less drastic trend is seen in sales of digital albums.
With ringtone sales falling and ad-supported revenues far below expectations, growth in download sales had been the one bright spot for the record industry. Now, growth has slowed to a crawl and, barring an immensely successful new product or service, could plateau by 2011.
This data could be alarming, as many hoped digital sales would continue to grow for years to the level of high disc sales seen in the pre-Napster era, essentially replacing the outdated media.
As Billboard hints, the strong growth in 2006-2008 can be tied to the critical mass of digital media player adoption. Those where the years where the majority of consumers were first-time iPod owners, and therefore first-time digital music consumers. More recent iPod/iPhone sales are likely replacing consumers’ older units rather than going to iPod virgins. With less consumers purchasing digital music for the first time, we may be getting a look at the complete market for the next few years.