TORONTO – You’d have to be trapped with the people of Lost to be unaware of the serious slide in CD sales.
But, the plethora of media choices along with free places to get music means there is no bonanza for paid music downloads, says a release from Solutions Research Group’s Fast Forward.
CD buying is at a 10-year low across all demographics as just 29% of consumers identified themselves as "active" music buyers in 2005, down from 54% in 1998. (Active Music Buyers are those who bought four or more CDs in six months).
And, the decline in overall music buying is not just a trend among young downloaders. Even the 50+ demo has seen their "active" buyer level drop from 46% in 1996 to 22% in 2005.
Plus, says the report, as music buying has plummeted, there’s been a parallel rise in additional media and devices like DVD players, Internet service, digital cable/satellite and wireless phones. Simply put, the "growth of alternative entertainment options impacted on consumer perceptions of ‘value for money’," says the report.
Fifty-eight percent of consumers in 1998 said CDs are good value for the money. That number is 47% during the 2005 survey.
What it all means, according to SRG, is that prices of CDs must drop big time, or significant meaningful value must be added to the product. The places where music can be bought (high traffic, non- specialist retail, high impulse locations) must be expanded and music purchases should be a loyalty bridge (e.g., discounts on future purchases, concerts, etc.)
Better branding is also a must. "Make labels stand for a genre, a type of artist or an occasion," says the release.
As for digital downloads, despite the furor over iPods and iTunes, "the prospects for paid downloads remain very limited – only 6% of Canadian Internet users visit these sites and a very small proportion converts to purchase," says the report.
"Ad-supported models will have stronger potential."
