Music Download Sales Soar; CDs Slip

U.S. album sales were down about 7% as 2005 drew to a close, but the budding market for music downloads, which more than doubled over last year, helped narrow the revenue gap, according to new figures.

Album sales from January through the week ended Dec. 25 stood at 602.2 million, compared with 650.8 million for the same period last year, according to Nielsen SoundScan.

Combined, album and singles sales fell about 8% from the same time last year. More than 95% of music is sold in CD format.

Downloaded tracks from online retailers soared to 332.7 million this year, compared with 134.2 million in 2004, an increase of 148%.

Although the figures were good news for recording companies looking to expand download sales, they didn’t bode well for music retailers relying on customers to buy music CDs rather than digital downloads to turn a profit amid declining sales.

“More and more we’re seeing customers switch to downloads or burning CDs from their friends,” said Jesse Klempner, owner of Aron’s Records in Hollywood. “The last couple of years we’ve been hanging on by our teeth.”

The top three best-selling albums of 2005 through Dec. 21 were rapper 50 Cent’s “The Massacre,” which had sold 4.8 million copies, followed by Mariah Carey’s “The Emancipation of Mimi,” with 4.6 million sold, and Kelly Clarkson’s “Breakaway,” which sold 3.3 million units, Nielsen SoundScan said.

Full-album downloads are counted under album sales along with other formats. Most digital downloads reflect single-track purchases.

Sales of music-related videos, another key revenue source for bricks-and-mortar retailers, plunged 23% from the same time last year, Nielsen SoundScan said.

Holiday shoppers helped pump up music download sales figures with some last-minute shopping, buying 9.6 million downloads – the biggest sales week ever for digital downloads, according to the company.

Music lovers bought 5 million tracks during the same week last year.

Final 2005 figures won’t be available until Wednesday. The last week of the year typically sees a boost in music sales as gift certificates or other promotions given out for the holidays are spent. Those additional sales could help narrow the revenue gap further.