First published on http://www.nytimes.com/
Download sales — a major growth engine for the music industry since the introduction of Apple’s iTunes store in 2003 — began to cool several years ago. But their slip from a format on the rise to one on the decline has come suddenly. Last year, downloads of individual tracks fell for the first time, by 6 percent, and in the first half of 2014 they dropped 13 percent, to 593.6 million.
“We’re in a period of transition,” David Bakula, a senior analyst at Nielsen, said in an interview. “Two years ago I don’t think anyone would have expected sales numbers to go down this dramatically.”
The top album so far this year is Disney’s “Frozen” soundtrack, with slightly less than 2.7 million sales since January and about three million since it came out in November. The most downloaded track is “Happy” by Pharrell Williams with 5.6 million sales, and the most streamed track is “Dark Horse” by Katy Perry, which has been listened to 188 million times. (That figure does not count listens on Internet radio services like Pandora, which is not tracked by Nielsen.)
For music companies and the artists they represent, a crucial question is whether the increasing income from streaming services — which pay fractions of pennies in royalties each time a song is listened to — will offset the drop in sales. While many in the industry are bullish on this question, Nielsen’s own formula suggests that, at least so far, it is not enough.
By comparing the revenue that music companies typically collect from sales and streams, Nielsen calculates that one album sale is equivalent to about 1,500 song streams. Using that formula, along with the industry’s standard yardstick equating an album with 10 downloaded tracks, Nielsen estimated that overall sales in the first half of 2014 were down about 3.3 percent from last year.