The music retail industry generates around $12 billion annually in the US alone, reaching global figures of up to $40 billion in 1995, and is another market that has benefited from its adoption of Internet presence and technologies. According to figures generated by the RIAA and IFPI, music sales in the US doubled between 1986 and 1994, from $4.6 billion to $12.5 billion. By 1995, sales figures had reached their peak, began to level off and have now started to decline - in 1997 US annual sales were recorded at $12.2 billion, down by 2.4% on 1996 figures of $12.5 billion (see chart below).
US music industry revenue, 1970-1998
(source - RIAA statistics, June 1997 and March 1998) [48]
This decline in revenue may be attributed to a combination of factors, including
- Conversion to CD - The introduction of the Compact Disc in 1983 fuelled a boom in sales due to music fans upgrading their vinyl LPs with the crisper-sounding, digital CD . During the second half of the 1980s, many labels exploited this trend and released their back catalogues as digitally remastered CDs. It is believed that for many, this conversion process is now over.
- Ageing boomers - Seven of the ten best selling albums ever were recorded in the 1970s and 80s (see table below), suggesting that the former generation who bought these albums no longer purchase music on a regular basis. This is confirmed by RIAA statistics that the under-35 market buys 64% of music.
Top 10 best selling albums of all time ranked by worldwide sales
(Source RIAA statistics, August 1998) [49]Rank
Album/Artist
Units sold (millions)
1
Thriller - Michael Jackson
25
2
Their Greatest Hits (1971-1975) - The Eagles
24
3
The Wall - Pink Floyd
22
4
Rumours – Fleetwood Mac
18
5
Greatest Hits Vols. I + II - Billy Joel
18
6
Untitled IV - Led Zeppelin
17
7
Back in Black – AC/DC
16
8
The Beatles – The Beatles
16
9
Boston - Boston
16
10
No Fences - Garth Brooks
16
- Lack of innovation - 1996 was a poor year for sales of new releases - five of the ten best selling albums in the US were released in 1995, including Oasis" What's The Story (Morning Glory). While there were 14% more gold records (sales of 500,000) awarded in 1996 than in 1995, platinum (1 million) sales were down by 17%, and multi-platinum sales down by 20%. Though these statistics are based on the American market, they reflect a worldwide trend.
- New technology / the Internet - New technologies such as computer games and the Internet have become popular pastimes for the bulk of the music buying demographic (see chart below).
Added expense involved in maintaining these pastimes has almost certainly resulted in a drop in music sales, particularly in the Under-35 age bracket. The music industry has attempted to reclaim its stake on this category of consumer by adapting its retail strategy to sell directly from the World Wide Web, a strategy which seems to have potential given that 73% of respondents to GVU's 8 th WWW Survey confirmed that they had ordered or bought products online.
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