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

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

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