2018 Another Nail In The “Download” Coffin! As Streams Soar

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The first half of 2018 has seen another nail in the coffin of the “download” with sales dropping a staggering 30% (based on stats from Nielsen), so in reality how long will the “download” feature actually last? Is the Paid download heading for the Industry’s waste bin?

Nielsen Music have put some figures out in the last week or so that highlight this meltdown.  During the first half of 2018, sales of song downloads dropped 27.4% to 223.1 million, from 307.2 million during the same period in 2017.  Separately, album downloads slipped 21.7% to 27.5 million units, down from 35.1 million previously.

Albums, of course, include a lot of songs in a bundle.  But the number of bundles is getting dangerously close to zero.

Not so long ago paid downloads were topping one billion annually.  Now, Drake is crossing one billion streams in a week, part of an insane growth story on platforms like Spotify and Apple Music.

The first half of this year saw streams surge to 403.4 billion, a massive jump of 41.6% mirror that the drop of almost 30% in actual downloads, and you can see that streaming is now the big boy on the block.

That’s an absolute gain of 118.6 billion, a half-year record.  Growth rates were also higher: last year, the first-half streaming gains were 36.5 percent year-over-year.  That makes the latest streaming surge particularly impressive, given that percentage gains tend to subside as baseline volumes increase and formats mature.

For artists this is not the best news, as streams generate a lot less revenue pound-for-pound.

An album download is worth gold compared to an album stream.  And the comparison gets even more lopsided when actual, physical album sales are involved.

Separately, sales of physical albums slipped 14.6 percent to 41.3 million units in the U.S.  That downward spiral is happening despite a continued boom in vinyl records, though CD sales drops are no match for vinyl’s resurgence.  During the period, vinyl LP sales grew a handsome 19.2 percent, though overall sales volumes were 7.6 million.

Vinyl records, for all of their gains, remain a niche format.  But that’s another story.

Streaming though seen as a savior, is killing the CD, and this has put a damper on the music industry’s recovery.

The math on this is simple, and Sony Music Entertainment has already said it out loud.  Heavy losses of highly-profitable formats are being counteracted by heavy volumes of low-profit streams.  Of course, volume is good and streaming revenue is solid overall, but the economics here are getting dampened by the loss of some old, high-dollar friends.

The result may be a tempered comeback, though one veteran executives are welcoming nonetheless.

How long will the download last?

Again: simple math shows this format dwindling towards 0 after just a few years.  30% year-over-year drops simply aren’t sustainable (to say the least).  But a rumored pullout by Apple could render this format completely extinct in a shorter period of time. If this is the case, it may actually drive CD/Vinyl sales for die hard fans of artists who want albums in a “to own” format.

Earlier, sources pointed to plans by Apple to shut down its iTunes music download store, with warnings issued as early as April of 2019.  Given Apple’s longtime dominance in song and album downloads, the result would be an even more precipitous decline for downloads.

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