By Jason Epstein

According to Nielsen’s global measurements, digital music sales have finally overtaken physical music sales to the tune of a 55.9% majority.  Yes, this is for the first time ever. Yes, I also said to myself, ‘Who still buys physical music?’ even though I, myself do from time to time.  To be totally honest, it feels like digital sales have been king for years now.

We could look at the numbers in an analytical way – like the fact that digital sales have gone up 9.1% since just last year with digital albums reaching 117.7m units, and that CD sales have decreased by 10%, though music sales in general are up 3% after a decade of pretty consistent decline - but let’s instead take a moment to reflect on what digital sales overtaking the physical sale of music means.

Pros and Cons

What are we giving up by going digital? – Tangible insert booklets and artwork, fold-out posters, and the joy of holding a piece of music in our hands.

What are we gaining? – Instant satisfaction, convenience, and mobile purchasing power.

(This all sounds reminiscent to the LP vs. cassette or compact disc comparison of years past.)

Lack of Availability

While we’ve seen brick-and-mortar music giants like Tower Records close up shop due to falling revenue and a general shift of music sales going to the likes of Wal-Mart, Amazon.com and Best Buy, this marks the first time that we can truly imagine CD’s being phased out as the years go on.

Earlier this year I wanted to buy my favorite band’s new album in CD format.  I found myself doing research and then calling multiple businesses on the phone before realizing I’d have to resort to ordering it online from Best Buy.  It’s getting harder to find physical releases of all but the highest profile artists, and this trend is not only here to stay, but will certainly evolve further.

Streaming Music

There is something that Nielsen Company’s numbers don’t address clearly: how are streaming services (which are more popular than ever) affecting sales?  They do mention statistics like Katy Perry and Eminem having 177 million and 174 million streams, respectively, but what implications does that have for actual music sales and ownership?  Surely Spotify, Pandora, and other internet-radio services must be digging into hard revenue since they are subscription or advertisement-based.

Looking Ahead

It’s been 11 years since the first iPod hit the market and nine years since the iTunes store opened up for business.  Where will physical music be 11 years from now?  I’m no analyst, but my prediction is that CD’s will go the way of records: for special releases and fan collections.

Back in the year 2000, when Napster first hit 56K modem connections and some of the first mp3 players were hitting the market, it wasn’t imagined that digital music sales would overtake physical, let alone be a legitimately lucrative way for artists to get their music out.  Even when the iTunes store opened in 2003, Apple was only vying for a small-yet-respectable market share…at least, at first.

Music technology history has just hit an important milestone.  How will our ways of consuming music evolve as time goes on?

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