Friday, January 03, 2014, 05:12 pm PT (08:12 pm ET)
Digital music sales drop for first time since advent of iTunes Store, execs blame streamingFull-year sales of digital music tracks and albums have decreased in 2013 for the first time since Apple launched the iTunes Store in 2003, and industry executives blaming streaming music services like Pandora and iTunes Radio for the drop.
According to Nielsen SoundScan, sales of digital tracks fell from 1.34 billion units in 2012 to 1.26 billion in 2013, a drop of 5.7 percent, reports Billboard. Digital album sales also fell 0.1 percent to 117.6 million, down from 117.7 million units the year prior.
The industry was not surprised by the dip in digital per-track performance after three quarters of weak sales, the publication said, but the drop for full-albums was somewhat unexpected given a strong start in early 2013.
Just as they had underestimated the power of digital music sales years before, industry executives appeared to once again be unwilling to cede ground to a new format, this time in the form of ad-supported or subscription Internet streaming services. Earlier in 2013, these people were reportedly reluctant to accept that Internet radio was cannibalizing digital sales, reports Billboard.
Instead of being caught off guard, however, executives apparently struck deals beneficial enough to offset the slip seen by digital sales. The actual results have yet to be revealed as SoundScan has not released its streaming numbers for 2013.
The overall breakdown of album sales marketshare for 2013 saw CDs leading with 57.2 percent, followed by digital at 40.6 percent and vinyl at 2 percent. Cassettes and DVDs made up 0.2 percent of all album sales.
When Apple's iTunes Store — previously the iTunes Music Store — opened its digital doors in 2003, it quickly became a popular alternative to brick-and-mortar music stores. Driven by a massive installed iPod, PC and Mac user base, iTunes took over as the No. 1 music seller in the U.S. in 2008, and was the biggest in the world by 2010.
Apple has also fielded its own streaming service in iTunes Radio, which was first announced alongside iOS 7 at last year's Worldwide Developers Conference. Like other streaming solutions, iTunes Radio is free to use with advertising support. iTunes Match subscribers, who pay $24.99 per year, can listen to the service ad-free.
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