With CDs suffering double-digit declines in sales and digital albums seeing double-digit increases in 2012, the inevitable has happened. Downloads for the first time accounted for the majority of albums sold, according to year-end data released by Nielsen SoundScan.
This past year, 37% of all albums purchased were done so as downloads via digital destinations such as Apple's iTunes store, Amazon's Amazonmp3 outlet or retailers such as eMusic. That's a 6% increase from 2011 and an 11% jump from 2010.
Previously, the bulk of album purchases came from so-called "mass merchant" stores such as Wal-Mart, Target and Best Buy. In 2012, 29% of all album sales were generated by the mass merchants, down from about 31% the previous year when sales at digital outlets and mass merchants were equal. In 2010, 33% of all albums purchased were done so at mass merchants.
The shift isn't a big surprise. Apple's iTunes store has been the largest music retailer in the U.S. since 2008, when it first overtook the title from Wal-Mart, and mass merchants haven't been shy about their shift away from carrying music.
Boosting the iTunes market share, of course, is its reliance on singles, but until this year album sales were still largely the province of physical retailers. Digital retailers can also offer discounts that physical outlets often can't match. Taylor Swift's new album "Red," for instance, was recently discounted to $1.99 on Amazon.com.
The tactic of "loss-leadering" music -- heavily discounting a CD in the hopes of getting customers in the store -- is now a less successful proposition. In the case of the struggling Best Buy, the Times' Shan Li recently wrote that the store "has been fighting to turn around a steady erosion in its business as Web rivals such as Amazon.com lure away its shoppers and turn its stores into showrooms where customers can test products before buying them online at a lower price."
As for the independent music sector, those stores remain a niche, despite the success of vinyl. Indie stores account for 7% of all albums sold in the U.S., the same percentage it held in 2011.
As reported earlier, overall albums sold declined 4.4% in the U.S. in 2012, and Adele's "21" was once again the top-selling album of the year with 4.4 million copies sold. Sales of CDs were down 13.5%, while digital album sales were up 14.1%. Including singles, the digital sector had a 55.9% share of the total music business.
PHOTOS AND MORE