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Business News Labels & Publishers Retail
Record sales decline not as bad as it could have been
By CMU Editorial | Published on Wednesday 25 March 2009
Record sales fell by 1.9% in terms of volume in the last quarter of 2008, while they were down 6.9% in terms of value as the profit margins on music continue to decline. We know this because of figures compiled by the Official Charts Company and published by the Entertainment Retailers Association earlier this week.
Although the quarter saw another decline in record sales, ERA are slightly upbeat about the stats, pointing out this was for the period that saw the collapse of both Woolies and Zavvi and that therefore the falls were relatively modest.
The latter’s demise did come right at the end of that period, of course, meaning it will probably have a bigger impact on the current quarter, though the closure of Woolies eUK distribution firm impacted on their website sometime before their administration was announced just before Christmas. And the demise of Woolworths and eUK will definitely have had a knock on effect, especially on the value of sales, given that the dying retailer’s administrators instigated a price slashing closing down sale which presumably led to rival retailers pricing CDs as low as they possibly could, despite the natural sales boost the pre-Christmas rush delivers.
ERA chief Kim Bayley told CMU: “After years of bad news about music sales, these figures give hope that the downward trend is beginning to flatten out. The collapse of Woolworths was potentially disastrous, but retailers worked around the clock to secure alternative supplies”.
Digital sales continued to boom, which helped compensate for both the usual CD sales decline and the High Street chaos brought on by Woolies’ demise (fortunately neither Woolies nor Zavvi were real players in the digital market). Across 2008, single track downloads were up 41.5% to 110.3m units while digital album sales were up 65% to 10.3m units. By the end of the year downloads
accounted for 96% of singles sales and 7% of albums sales.
Bayley reckons the move to DRM-free digital music in 2008 helped with the continued growth of the legitimate download sector. She continued: “The increasing move towards DRM-free formats has helped drive download sales to this unprecedented high”.
Despite the decline in record sales and the wider recession, Bayley says the sector her trade body now represents – entertainment retail – continued to perform OK, despite the high profile victims of the credit crunch. Though that, she admitted, was mainly thanks to the continued growth of the gaming sector, which many music retailers increasingly rely on. Kim: “The success of video games is helping entertainment retailers withstand the impact of the financial crisis. No sector can be immune from the problems of the wider economy, but these results show that as long as suppliers come up with new and innovative entertainment products, then consumers will respond positively”.
