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The Steady Demise Of The CD Buyer How The Music Industry Is Sleepwalking Into A Revenue Collapse

Report by Mark Mulligan
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The 20,000 Foot View The CD was the catalyst for the record labels’ apogee but now resembles a product strategy time bomb ticking away. With all the momentum of streaming it is tempting to discount CD buyers as an inconvenient legacy of the physical era, a format anomaly that will soon pass. Yet physical music sales generated more than twice the income that streaming did in 2015 and will remain a larger revenue source for the vast majority of the decade. Crucially, CD buyers are becoming an increasingly distinct group of older, less tech adventurous consumers for whom there is no digital transition path. When they stop buying CDs their spending will disappear, leaving a gaping hole in recorded music revenue. Key Findings

  • Physical music sales generated        billion in 2015,        of all revenues
  • CD buyers are the largest single group of recorded music consumers with        penetration compared to        for concert goers,        for music downloaders and        for subscribers
  • Physical music spending fell by        between 2013 and 2015 in the US and UK
  • CD buyers have an average age of        and are getting older every year 
  • Their average annual spend is just        or        a month, far short of the standard        music subscription fee
  • CD buyers’ average spend is falling annually, down from        in 2013
  •        of CD buyers are female compared to        of music subscribers        of CD buyers are over        while        of subscribers are under       
  • Though CD buyers are casual music fans compared to subscribers they generate        times more average revenue than free streamers 
  • CD buyers are valuable consumers who are neglected at risk
  • Physical music revenue accounted for        of German and Japanese revenue combined in 2015
  • Streaming music revenue will not overtake physical music revenue until mid 2019
  • By 2020 more than a quarter of music revenues will come from physical sales in        out        main music markets globally
  • It is time for the music industry to follow Netflix’s lead and digitize its relationships with its physical product customers
  • Subscriptions are not a natural fit for casual music buyers

Companies mentioned in this report: Amazon, Netflix, SoundCloud, Spotify, Tesco, Walmart, YouTube

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