BELIEVE IT OR NOT: Music Buying Audience Is Growing & The CD Is Far From Dead [STUDY]

NPD's new "Annual Music Study" shows that after years of losing consumers who simply stopped buying music, the total number of music buyers increased for the second consecutive year, growing 2% in 2011 to 78 million. The number of paid download buyers increased 14% in 2011 to 45 million customers.

Digital buyers also spent more at iTunes Music Store, Amazon MP3, and other digital music stores in 2011; the average annual expenditure for digital music rose 6 percent in 2011 to $49. After years of decline total music-track sales rose 4% percent during 2011.

Although CD sales dipped, the decline was not nearly as severe as in the past, and was offset by the paid-music download market. Even as Apple's iTunes approaches its tenth anniversary next year, there are still nearly twice as many CD buyers in the U.S. as there are paid digital-music downloaders, according to NPD.

Why The Turnaround?

The study's authors speculate that there are a variety of reasons for the overall increase including a perceived improvement in the quality and value of the music available, and a wider variety of sources to discover new music in online services like Pandora, Rhapsody, and Spotify.

NPD also reported that the fastest growing form of music listening was online radio. While listening to CDs and AM/FM radio are still by far the most popular ways Americans engage with music, online-radio listening has grown from 29% two years ago to reach 43% of the internet population in 2011.

P2P Use Down

According to the study, 13% of Internet users downloaded music from a P2P site, which is down from a peak of 19% in 2006. "Industry efforts to combat illegal file sharing, and increased options for listening and downloading legally, have resulted in a sharp reduction in the number of P2P music downloaders," according to said Russ Crupnick, senior vice president of industry analysis at NPD.

Data note: The information in this press release is from NPD's "Annual Music Study," which is based on online surveys of U.S. consumers age 13 and older. NPD conducted consumer surveys between December 14, 2011 and January 3, 2012, and the final reporting is based on 5,799 completed surveys. In order to compare music acquisition across formats, NPD uses an equivalency of 10 standalone digital tracks for each CD album.