Album sales decline slows in Q1; digital sales dip

NEW YORK (Billboard) - The first quarter of 2010 brought a few surprising sales results to a battered music industry.

On the plus side, a robust release schedule contributed to a sharply slower decline in U.S. album sales during the first quarter. Sales of hit albums by chart-toppers like Lady Antebellum, Sade and the Black Eyed Peas helped avoid the double-digit drops that had become so common in recent quarters.

During the three months ended April 4, combined U.S. sales of albums and track-equivalent albums (or TEA, where 10 tracks equal an album) totaled 113.2 million units, down 6.1 percent from 120.6 million during the corresponding period of 2009, when sales fell 7 percent year on year, according to Nielsen SoundScan.

Album sales minus TEA totaled 82 million, down 7.9 percent from 89 million a year earlier, marking a sharply slower rate of decline than the 13.5 percent drop recorded in the year-earlier period, according to SoundScan.

And for the first time, the nontraditional retail sector -- which consists mostly of download sales at iTunes and CD sales at online vendors like Amazon -- has emerged as the largest U.S. retail channel, displacing mass merchants like Walmart and Target.


On the downside, digital tracks recorded their first year-on-year quarterly sales decline, falling 0.9 percent to 312.4 million in the first quarter from 315.4 million in first-quarter 2009, when track sales climbed 13 percent year on year.

An important caveat to these numbers: Because the 2009 sales year included a 53rd week, SoundScan dropped the first sales week of 2009 from all year-on-year sales comparisons with 2010 data to preserve a 13-week comparison for every quarter of this year.

If SoundScan hadn’t made that adjustment and opted instead for a 14-week first-quarter comparison, digital track sales would still have registered their first quarterly decline -- albeit a slightly more modest fall of 0.1 percent to 349.6 million for the period ended April 4, from 352.6 million for the period ended April 5, 2009.

Industry executives ascribe deteriorating track sales to several factors, including the implementation of variable pricing at iTunes. While consumers have demonstrated a willingness to buy hit songs for $1.29, catalog tracks priced at that level haven’t been selling as well as they were at 99 cents.

Country music enjoyed a remarkable first quarter, with album sales jumping 13.1 percent to 10.4 million units from 9.2 million in first-quarter 2009. Meanwhile, R&B/hip-hop, which had been the hardest-hit genre during the prolonged decline in music sales, was one of the more resilient categories in the first quarter, with album sales declining 3.8 percent to 16.2 million from 16.8 million a year earlier.

Among other genres, Christian/gospel album sales also managed to hold up better than the broader market, slipping 3.5 percent from a year earlier to 6.1 million units. But Latin music sales were again hit hard, plunging 27.2 percent to 3.4 million, while rock fell 16.9 percent to 25.4 million.


Sales of current albums -- those that are within the first 18 months of their release or older albums that stay in the top half of the Billboard 200 or are active on radio -- showed signs of staging a comeback, declining only 4.1 percent to 46.1 million units in the first quarter from the 48.1 million units scanned in 2009’s first quarter. That compares to the 16.4 percent year-on-year decline the category suffered in first-quarter 2009.

Among current albums, two titles topped sales of 1 million units during the quarter: Lady Antebellum’s “Need You Now” moved nearly 1.6 million, and Sade’s “Soldier of Love” sold almost 1.1 million. By contrast, there weren’t any million-selling albums in first-quarter 2009, when the top-selling title was Taylor Swift’s “Fearless” with 865,000.

The top-selling digital songs of the first quarter were Train’s “Hey Soul Sister,” which racked up sales of 2 million; the Black Eyed Peas’ “Imma Be” at nearly 2 million; and Ke$ha’s “Tik Tok” at 1.9 million. The best-selling digital album was MTV’s “Hope for Haiti” with 370,000 units sold.

Among the largest record labels, Sony Music Entertainment and financially troubled EMI Music notched market-share gains of nearly two percentage points in the first quarter. And continued strong sales of digital albums and tumbling sales among retail chains and mass merchants helped lift the nontraditional sector to the quarter’s largest retail category, with album sales of 28.7 million, up 12.4 percent from a year earlier. Album sales at mass merchants declined 4.1 percent to 27.7 million from a year earlier.