Music Sales Report Mixed

By Charles Duhigg

July 8, 2006 12 AM PT

Times Staff Writer

The music industry received mixed news Friday: Declines in sales leveled off thanks to an increase in digital downloads, but consumers bought fewer new releases this year.

Sales of music albums in the U.S. declined by 4.2% in the first half of the year, to 270.6 million units, compared with the same period a year earlier, according to data released by Nielsen SoundScan.

The drop, however, was mostly offset by a 77% increase in digital sales of music tracks. The 280.9 million digital singles sold in the first six months of this year -- the equivalent of 28 million albums -- brings the effective number of albums sold to 298.7 million units, a 0.2% increase over last year.

“I think it might be too early to say this is good news,” said Geoff Mayfield, a senior analyst at Billboard magazine. “But it definitely means that we can be optimistic about the digital marketplace.”

The data also indicated that few musical blockbusters had captured the public’s attention this year. The biggest seller so far -- the “High School Musical” soundtrack -- sold 2.6 million copies. In comparison, 50 Cent’s “Massacre,” the bestseller of the same period last year, had sold more than 4 million copies by the end of June.

In fact, only 22% of the albums sold this year were released in 2006. Last year, 39% of the first six months of sales were new releases.

Albums by Rascal Flatts, James Blunt, Mary J. Blige and Carrie Underwood are this year’s other top-five sellers.

“When you make vast libraries of songs available online, people begin to buy forgotten albums,” said analyst Phil Leigh of Inside Digital Media Inc. “People are buying older songs because they can. They’re beginning to buy what they want, instead of what is just available in stores.”

Reflecting the paucity of hits, sales in two of music’s most popular genres -- R&B; and rap -- were down a combined 20%, to about 83 million albums. Alternately, sales of country and Christian/gospel albums increased by a combined 15%.

The battle for market share among the four companies that dominate music sales remained relatively static. Warner Music Group had the biggest gain, increasing its share of album sales in the U.S. by 2.6 percentage points to 19.3%. EMI Group, which is locked in an acquisition battle with Warner Music, lost 0.4 of a percentage point of its market share, falling to 10%. Universal Music Group remained dominant, selling more than 1 in 3 current albums purchased in the U.S. The half-year’s biggest loser was Sony BMG Music Entertainment, which lost 1.5 percentage points, falling to 26.3%.

Despite continued problems with music piracy and illegal peer-to-peer computer networks, overall sales of albums, singles, music videos and digital music totaled 564 million units, a 23% increase over the same six-month period last year.

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U.S. album sales

*--* Album (artist) Year to date (in millions) High School Musical (various) 2.62

Me and My Gang (Rascal Flatts ) 2.00

Back to Bedlam (James Blunt) 1.66

Breakthrough (Mary J. Blige) 1.50

Some Hearts (Carrie Underwood) 1.48

Now 21 (various) 1.36

King (T.I.) 1.33

Taking the Long Way (Dixie Chicks) 1.27

Amore (Andrea Bocelli) 1.13

All the Right Reasons (Nickelback) 1.07