STUDY: Number of Music Buyers Down 21% Since 2007

STUDY: Number of Music Buyers Down 21% Since 2007

NPD Group claims 24 million fewer people bought music in 2009, and that more troublingly, despite a decrease in the amount of music files being shared on P2P networks, the number of people buying digital music declined as well.

Consumer and retail market research firm NPD Group spelled out a long list of troubling statistics at a gathering of music and technology executives at the Digital Music East conference yesterday that highlight an industry in transition.

Russ Crupnick, one of the group’s senior industry analysts, first estimated that 24 million fewer people bought music in 2007 as compared to 2009. That’s a 21% drop in customers, a figure sure to raise more than a few eyebrows, myself included.

Unsurprisingly there were 33 million fewer CD buyers in the US, and 24 million fewer music buyers worldwide. Total music spending also fell by 19%, but spending by individual consumer actually rose by 2%. Spending by digital music listeners was even up from $33 to $50 per year.

However, even more disturbing for record labels is that the number of people buying digital music – the CD’s replacement and the hopeful savior of the music industry – has declined as well, down to 34.6 million from 35.2 million.

This decline nicely mirrors an NPD Group study from last April that found teens acquired 19% less music, both legally and illegally, in 2008 than they did in 2007. This includes a 6% decline in usage of P2P networks to download music illegally, meaning the music industry’s woes are much greater than illegal file-sharing as it would often have you believe.

That study also found that one of the reasons for the decline in music acquisitions by teens is due to changes in the way they listen to music. More teens are choosing free online music streaming sites like Pandora or Last.fm than ever before.

So what is the music industry to do? Crupnick emphasized that the increase in per person music consumption was reason for optimism.

With so many alternative entertainment options these days he suggested that consumers need further incentive to buy, and that record labels should try bundling songs in a package like perhaps 3 for $1.

“You got some maturity in the marketplace,” said Crupnick. “If I ran a record label, the first thing I would do is go out and hire a consumer promotion person from Kraft or Colgate. The consumer is saying they wanted to be promoted to and persuaded to come try this.”

These comments echo what Pharrell Williams, Billboards’ producer of the decade, and Grammy Award-winning singer, songwriter, said this past January at a music industry trade fair when he recommended artists “market” themselves and chase advertisers rather than record labels.

Stay tuned.

[email protected]