Nielsen warns of cooling digital music business

Online music sales have leveled off in the course of the past year, Nielsen said today. Sales and subscriptions at iTunes, Amazon MP3 and other American stores in the first half of 2010 were roughly similar to a similar part of 2009 compared to a 13 percent increase the year before and a 28 percent jump in 2008. The researchers didn't have a direct explanation but suspected that disenchantment with the music on sale, as well as economic difficulties and a confusion of sources, contributed to the effect.

The researchers also dampened hopes that subscription services like Rhapsody or Zune Pass would gain traction, as the lead still went primarily to pay-per-track stores such as iTunes. Mobile services were gaining a small amount of ground, but a significant number of desktop listeners were using YouTube for single tracks rather than paying for the downloads.

Stalled US sales were considered unusual and weren't necessarily proof that they wouldn't eventually replace CDs, Nielsen said. The study group pointed to Europe, where digital music still grew seven percent in the UK, 13 percent in Germany and 19 percent in France. These areas were relatively late to per-track sales but also have had services like Spotify that theoretically hurt music revenue by encouraging free, ad-based music instead of paying. Spotify has yet to land a US deal and has been resisted by labels that believe it would devalue music.

Apple is still thought to have the largest share of domestic music with 28 percent of all sales, making a large part of any slowdown its responsibility. It just this month launched its Ping social component for iTunes to help listeners find music they wouldn't otherwise discover and buy. [via Reuters]

by MacNN Staff