Chris Anderson: Last Friday, the RIAA released the official sales figures for 2005. You’ve seen the press accounts ("Music Sales Post Their Sixth Year of Decline"), but when you look closely at the numbers it doesn’t look quite as bleak as that.
- Although CD sales have fallen off a cliff, digital sales appear to be making up most of the difference. However, there are a few statistical nuances…
- In 2005, the RIAA started tracking ringtone ("mobile") and subscription (Rhapsody, et al) digital sales. In 2004, it started tracking digital download sales (iTunes, et al). Obviously there were sales in all three categories in previous years, but they just don’t show up in these numbers. So 2005 looks slightly better than it really is.
- Nevertheless, those distortions aren’t huge. In revenue terms the industry did about as well last year as it did before, and it’s worth noting that the margins on digital distribution are considerably higher because there are no physical goods to manufacture and ship. So 2005 may have been more profitable than 2004 (it certainly was for Warner Music Group). Who knew?
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