Last week, Nielsen came out with a report noting that sales of digital downloads declined for the first time, while streaming activity is on the rise. Specifically, U.S. digital downloads fell 5.7% for singles and 0.1% for albums. Streaming music—including online video, Internet radio, and on-demand services—meanwhile increased 32%.
This week, noted digital music analyst Mark Mulligan posted some additional analysis of what this means in his report How Streaming Will Impact Music Sales. It’s a pretty data-heavy piece, so be warned in advance, but it’s definitely worth a read if you’re at all concerned about this transition. Here’s a key excerpt:
It is important to understand the appropriate context for the shift to streaming: it is fundamentally a transition of spending. Just as the download was a transition from the CD so streaming subscriptions are a transition from the download. This is because the majority of subscribers were already digital music buyer before becoming subscribers and the majority of those were iTunes customers. 50% of subscribers buy album downloads every month and 26% buy CDs every month (see figure). On the one hand this can be interpreted as the fantastic capacity of streaming to drive discovery and music purchasing. There is some truth in this, but it is an inherently temporary state of affairs. If streaming services do their job well enough there should be little or no reason for a subscriber to additionally buy music. They do so because consumers transition behaviour gradually not suddenly. The fact that a third of download buyers still buy CDs illustrates the point.
Studies like these not only reinforce the need for artists to sell music in multiple formats (including vinyl, which increased 32% as well last year, by the way), but also to sell more than music. Merch, events, and experiences are all equally valid ways that fans can show their appreciation for the music they love and the artists that make it.