CD Sales Falling Faster

In July I noted that CD sales were down 7% for the first half of 2005, the death of the CD seemed near. Now the numbers are in for the full year– CD sales dropped 8% compared to 2004. That means that the trend sped up slightly as the year went on. The drop is almost certain to continue and likely to speed up even more. We think big box stores like Best Buy will soon start allocating less space to CDs and carrying fewer titles, creating a downward spiral of consumer satisfaction with CD purchases.

Of course, it’s no surprise that CDs are being replaced by new technology, that’s how new technology works. The crucial question is the same as it’s been for years: will the major record labels be able to create a monopoly in the online music industry the way they have done for decades in the traditional, offline industry? If they can’t, they will crumble, because their current bloated infrastructure can’t survive real market competition from independent labels.

Here’s a good rundown of the industry sales numbers in 2005.