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More Music Sold but Less Revenue in ‘07, Kids Still Downloading Illegally

Though the amount of music that U.S. consumers acquired increased 6 percent year over year in 2007, a sharp increase in legal digital download revenue did not offset declines in CD sales, resulting in a net 10 percent decline in music spending, according to the NPD Group (via MarketingCharts).

Per-capita music spending among internet users fell from $44 in 2006 to $40 in 2007, and as a result the overall portion of music acquisition that consumers actually paid for fell to 42 percent in 2007 from 48 percent in 2006, NPD said.

One million consumers dropped out of the CD buyer market in 2007, NPD estimates, saying that flight was led by younger consumers: 48 percent of U.S. teens did not purchase a single CD in 2007, compared with 38 percent in 2006.

Legal music downloads now account for 10 percent of the music acquired in the U.S. Reflecting that growth, in 2007 Apple’s iTunes Music Store became the second-largest music US retailer (based on a 12-track CD equivalency for music tracks sold) after Wal-Mart.

Illegal Downloads Still Popular among Kids

The music industry’s aggressive litigiousness vis-à-vis illegal music file-sharing has not dissuaded many tweens from continuing to illegally download music, although most kids are using legal means to access music, NPD said.

According to its “Kids & Digital Content” report, 70 percent of tweens (age 9-14) are downloading digital music in an average month. Though most are using pay-to-download, levels of illegal P2P file-sharing are high, it found.

• Used by nearly half of tweens who download music, iTunes is the most popular digital music store (49 percent).
• However, the second most popular source for digital music among tweens is the Limewire file-sharing service, used by 26 percent of digital tweens to illegally share music.
• MySpace was the third most popular site for music sharing, used by 16 percent of tweens.

MarketingCharts has more about the studies.