Peter Kafka

Recent Posts by Peter Kafka

Music’s Digital Sales Boom Comes to an End

Remember when people used to predict that digital music sales would make up for the disappearing CD? That’s officially over now: Last quarter, for the first time ever, the number of digital songs sold in the U.S. declined.

Nielsen SoundScan says the drop was either one percent or .09 percent, depending on how you count, so this isn’t the bottom falling out. But it does look like a peak, and it has been in the works for some time.

Earlier this year, Warner Music Group (WMG) pointed out that it was seeing its digital sales slow and argued that one reason was because the industry had raised prices on most of its songs at Apple’s (AAPL) iTunes store in 2009.

That thinking is now pervasive across the industry, Billboard notes: “While consumers will still buy hit songs for $1.29, it seems that catalog tracks priced at that level are not selling as well as they were at 99 cents.”

But you could also make the case that digital tracks were going to decline anyway and that the industry is better off squeezing every penny it can.

And if you want to try to find a silver lining here, you could argue that since song sales are slipping, there’s no reason for the industry not to support rental/subscription models like Spotify, Rhapsody and MOG by cutting their licensing fees. But I wouldn’t bet on that happening soon.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik