Final ’06 CD Sales Down. Even Digital Misses Projections

U.S. music sales which include CDs
and digital album downloads fell 4.9% in 2006 according to  Nielsen SoundScan.  U.S. album sales fell to 588.2
million from 618.9 million in 2005. Digital track
sales however rose 65% to 581.9 million units
in ’06 pushing overall music sales to 1.19 billion units for a healthy increase in total music sales including albums, singles, video and digital tracks of 19.4%.

The numbers can be deceiving and these didn’t show enough growth in digital from some analysts. "Not only did year-end 2006 digital sales fall short of our
expectations, more concerning is the deceleration in growth
during the fourth quarter," according to Richard Greenfield of
Pali Research. "We are increasingly concerned that digital track sales
will struggle to show 40% growth in 2007."

There was a big surge from December 25-31 where SoundScan said digital track sales hit a record
30.1 million units versus a previous record of 19.9 million in ’05. Digital album sales for the week
totaled 1.2 million. But while Greenfield estimates that the number of digital songs sold in 4thQ rose 57%; he notes that it was sharply slower growth than the 129% jump in the fourth quarter of 2005.

SoundScan sees the numbers more optimistically. For the first time a song, "Bad Day" by Daniel Powter, topped 2 million
in digital sales in one year. 22 digital songs exceeded 1
million sales  compared with only two in 2005. "Once again, this year we’re seeing incredibly high numbers
of consumer music purchase decisions," said Rob Sisco,
president of Nielsen SoundScan. "We continue to see tremendous
growth in digital track and digital album sales, which are up
65 percent and 101 percent respectively." (For an in depth look at the numbers.)