Legal Music Downloads Up Threefold in 2005 
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Written by Naitze Teng   
Thursday, 14 July 2005

Nielsen SoundScan released figures that show an increase in legal music downloads from 55 million in the first half of 2004 to nearly 159 million in the same period in 2005. While the number of downloads has tripled, actual sales for the industry have decreased by two and a half percent so far this year. This drop is being blamed on weak album sales, but analysts are cautious, suggesting it is still too soon to tell if this trend will hold up through the holiday season. The data also shows single-song downloads account for six percent of total sales, compared to less than two percent last year.

While the fast rise in paid downloads might look encouraging to the industry, we should not assume this increase comes from users who were downloading illegally just a year ago. This is not necessarily a triumph over piracy. If anything, the drop in overall sales (coupled with the single-download’s increasing share of these sales) suggests that people who were traditionally buying albums have moved towards buying singles. With people foregoing $12 to $18 CDs in favor of $0.99 downloads, the single-download business should continue to grow at a very fast rate, cannibalizing traditional album sales. Major record labels need to stop focusing so much on piracy, figuring out instead how they can adapt their business models to serve an evolving market.

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