iamtheone

The RIAA has recently released a sales report for recorded music for 2003, along with comparisons to years past, for all recorded media. CD sales still ruled supreme in 2003, with nearly 756 million total discs sold. However, that number was down 7.1 percent over 2002’s total number of CDs sold.

DVD-Audio sales remained stagnant in 2003, with a 0.08 percent increase in sales to approximately 400,000, says the RIAA’s “2003 Yearend Statistics” report. Sales for DVD-Audio discs were first tracked in 2001 at about 300,000 units and increased to 400,000 units in 2002. Music industry executives point out that these numbers could be slightly on the low side, because Soundscan allegedly has yet to track DVD-Audio sales on the Internet, which is currently the best place for fans of the format to purchase discs. Nevertheless, total DVD-Audio total sales at this point are many hundreds of times less than that of the CD.

SACD sales were tracked for the first time in 2003, showing 1.3 million discs sold during the year. 2003 marked the year where high-profile “hybrid” SACD titles (which play on CD players and were marketed in the CD bins of many record stores) from Pink Floyd, the Rolling Stones and Bob Dylan. The backwards compatibility of SACD, more aggressive marketing and PR, coupled with big name albums being released in 2003, helped SACD outsell DVD-Audio by 3.25 times in 2003, according to RIAA year-end sales numbers.

Another report released by the RIAA, compiled by Peter Hart Research using 2900 phone interviews with music consumers (error rate reported at +/- 1.8 percent), showed a dramatic increase in market share for DVD-Audio. DVD-Audio’s market share, according to Peter Hart Research, has increased from 1.1 percent in 2001 to 1.3 percent in 2002. In 2003, DVD-Audio’s marketshare bumped up to 2.7 percent, aided less by their small increase in sales than by the significant decrease in the overall sales of CDs.

These studies highlight a number of interesting facts and trends about the music business. CD still is the king of the hill in 2003, even when faced with the technological advantages of SACD and DVD-Audio’s ability to sync to video, etc. DVD-Video music videos saw a strong increase in sales numbers, according to the RIAA’s Year-End Statistics Report, which proves that the Generation X consumer wants to see his or her music as much as they want to hear it (often in surround sound). DVD-Audio and SACD’s combined sales, according to the RIAA’s Year-End Report, make up 483.7 times fewer sales than CDs.

The market share increase of DVD-Audio is a glimmer of hope, although high-resolution audio’s best example for success comes from HDTV. The CEA reports that DTV (TVs capable of playing a extended resolution or HDTV signal) sales continue to boom in the first quarter of 2004, with sales toping 800,000 sets (many priced from $1,500 to as high as $30,000 or more per unit) during January and February 2004. In September 2003, DTV sales had doubled from the previous year’s September sales to 550,000 sets in that month, according to the CEA. Clearly, consumers are willing to invest heavily in picture quality (not just the convenience of, say, downloadable music), despite the fact that not everything is broadcast in HDTV. With this industry trend in place, there is hope for DVD-Audio and SACD to see their sales numbers increase in significant ways. Just as an add-on sale to a DTV, “universal” players (which play DVD-Audio, SACD and DVD-Video discs) will likely be part of many DTV sales, thus increasing the potential number of homes than can play SACD and DVD-Audio, along with their DVD movies. But for the formats to become truly successful, major labels will need to release significantly more well-mixed surround sound albums from high-profile artists, with marketing and PR that is far superior to their current efforts. Consumers with surround sound systems and high-resolution audio playback could also help the cause by becoming ambassadors for high-resolution audio formats by playing their best-sounding discs for their friends and family members. No one argues that high-resolution surround sound audio isn’t awesome when they hear it. The last big effort for high-resolution audio will come from auto manufacturers who can install DVD-Audio (see the Acura TL) and/or SACD players, complete with 5.1 audio systems, as stock items in their cars. Satellite radio is picking up momentum with car companies, as terrestrial radio continues to lose its voice with commuters, thanks to the pathetically bad programming found in many major cities in America. Looking at the situation optimistically, most American consumers change their cars more often than they upgrade their music systems.

Sources:
- RIAA 2003 Year-End Statistics
- RIAA 2003 Consumer Profile (Peter Hart Research)

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