Despite the growth of digital music sales in 2008, the music industry suffered as compact disc music sales continued a downward slide.

The Nielsen SoundScan year-end figures also revealed CDs are the most profitable and common medium for all recorded music, as it still snaps up 85 percent of overall album sales.

The recording industry even is trying to find ways to make up lost revenue when music listeners elect to download individual tracks rather than purchase entire albums. More than 1 billion digital songs were sold throughout 2008 -- a whooping 27 percent increase from 2007 -- while physical album sales fell 20 percent down to 362.6 million.


Purchasing an individual song for $0.99 per song is more appealing than spending between $10 and $15 for an album with two or three songs. During the most important time of the year for music sales -- the final three months -- record sales declined the most, according to sales numbers.

The Recording Industry Association of America (RIAA) originally tried to blame the decline of CD sales on peer-to-peer piracy, but analyst reports indicate piracy is not to blame.

Atlantic Records recently became the first major music publisher to announce digital music sales surpassed CD sales, with more than 50 percent of music sales now coming from music downloads. Warner Music Group also announced digital revenue also surpassed physical sales, with other record labels expected to announce similar trends.

Atlantic, a Warner Music Group unit, is the first major record label to have digital music sales surpass physical media sales.

"We're like a college basketball team on an 18-2 run," said Craig Kallman, Atlantic chairman and CEO.

In April, industry numbers indicated U.S. consumers still purchase more CDs as opposed to downloading digital music, but several record labels mentioned the gap was closing and digital sales would soon overtake CDs. The milestone is significant because this marks one of the first times a digital technology has helped surpass brick-and-mortar retail revenue for media delivery.

Since Napster helped revolutionize the way music listeners can acquire music, digital music has undergone a great revolution over the past nine years.

Even so, there are dozens of legal music download services available for consumers to choose from: Apple iTunes, Amazon, Napster, Rhapsody, Wal-Mart, etc. iTunes is now the No. 1 online music retailer, with Wal-Mart and Amazon attempting to catch up.

The Recording Industry Association of America (RIAA) has long struggled to adapt to the digital age, and still continues to battle music copyright infringement by launching lawsuits against thousands of file sharers across the U.S.

As digital music continues to steal market share away from physical CDs, the industry will face a sobering reality because the overall market for music continues to shrink.
Information gathered by Forrester Research indicates U.S. music sales in 2013 will be valued at just $9.2 billion, with the number dropping from $10.1 billion in 2008. In 1999, music sales were worth $14.6 billion, the RIAA said.

Record labels will again be forced to branch out and try to find revenue streams from new locations it never had to work with.

Dell will work with Universal to offer music bundles on new Dell PCs, while Nokia will work with several music labels to have preloaded tracks and music downloading built into new mobile phones.


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