January 9, 2006
LOS ANGELES (Billboard) - There was so much legitimate
downloading in the final week of 2005 that it recalled the impossible
tallies research firms used in the late 1990s to dazzle venture
capitalists and scare the daylights out of major-label executives.
In the seven-day stretch between Christmas and
the new year, millions of consumers armed with new MP3 players
(primarily iPods) and stacks of gift cards gobbled up almost
20 million tracks from iTunes and other download retailers, Nielsen
In the process, consumers shattered the tracking
firm's one-week record for download sales.
A look inside the numbers shows just how unprecedented
a week it was for the download business:
- Before the week ending January 1, 2006, the record
for the most downloads sold in seven days was 9.5 million tracks
-- set just one week earlier.
- Sales of 20 million songs were almost three times
the amount of digital tracks sold in the same seven-day span
a year ago.
- Fifteen songs on the current Hot Digital Songs
chart surpassed the one-week record for sales of a single track.
- Rap group D4L's "Laffy Taffy" took
the top spot with 175,000 tracks sold, more than doubling the
mark of 80,500 downloads Kanye West's "Gold Digger" set
the week of September 17.
- Each of the top 11 titles on the Hot Digital
Songs chart sold more than 100,000 downloads.
For the year, the digital track sales tally reached
352 million -- a 147% increase over 2004's total of 142.6 million.
In comparison to the volume of music that is downloaded
through peer-to-peer networks, those numbers may not seem like
much. P2P monitoring service Big Champagne estimates that at
least 250 million tracks are downloaded worldwide each week from
But a dramatic rise in the tide of authorized download
sales in recent weeks suggests that changes may be afoot in the
consumer's relationship to digital music.
The important question for the music business is
whether 20 million downloads represents the new baseline for
digital track sales. A year ago, a 33% pop in download sales
in the week following Christmas permanently raised the bar on
weekly download volume by 2 million tracks.
Technology and distribution executives at the major
labels are not holding their breath that download sales will
now run at a rate of almost triple the 7 million tracks that
were being sold on average in December. They say big sales of
gift cards are likely creating the current volume of such significant
Yet gift cards were available in 2004, too. If
the market can retain volume gain as it did last year, the numbers
are tantalizing. Last year, sales fell by about 20% in the weeks
following New Year's; such a drop this year would yield a weekly
volume baseline close to 16 million tracks. That would put the
download market on pace for sales of 750 million to 1 billion
tracks in 2006.
Likely to drive the download business is the fact
that the number of iPods and other MP3 players in distribution
have exploded in the last year. The Computer Electronics Assn.
estimates that MP3 player revenue increased 200% to more than
$3 billion in 2005.
Apple claims to have sold more than 30 million
iPods to date, but will likely have shipped a total close to
that number in 2005 alone.
Research firm NPD Group estimates MP3 player revenue
at leading retailers topped $500 million on sales of more than
3.3 million units for the five weeks between Thanksgiving and
Christmas--a 65% jump in dollar volume from the 2004 holidays.
Sales of MP3 accessories were big too, topping $160 million during
the five-week period.
NPD figures exclude direct sales of iPods through
Apple Computer and online sales.
And for the first time, sales of MP3 players are
surpassing sales of personal CD players and CD shelf systems,
"We have definitely moved," says Stephen
Baker, VP of analyst services for NPD, "from MP3 players
being a computer-oriented product to a consumer-directed product."