Online Music at a Tipping Point?

Online Music Web 2.0

The LA Times reports on the latest Nielsen SoundScan data for 2006. Interesting is that the number of albums by which CD sales declined was more than offset by the number of digital albums sold. Apparently, the total revenue still went down. On the other hand, I don’t know for sure but I wouldn’t be surprised if the profit margin on digital albums is greater and if net income increased for the industry as a whole.

The LA Times article also points out that digital sales are increasing more quickly than CD sales are slipping, and that we may be on the verge of a format shift as significant as the advent of the CD itself and of a large-scale increase in demand as people shift to the new format en masse.

Of note too is the increase in the availability of DRM-free music. WebProNews (in an article quoting our own Bob Caswell) holds out hope that we may be nearing the end of DRM completely. One can only hope.

As a technology enthusiast, this is extremely exciting. As a record geek, though, it occurs to me that, just as CD’s represented a slight (but, according to audiophiles, significant) decrease in audio quality from analogue vinyl recordings, so too the quality of digital downloads is a decrease in quality from CDs. (There is some evidence, however, that the difference may not be noticeable.) There it is. I’m not sure what to make of that, but I said it.

Either way, hold on to your hats, folks. We may be in the middle of a dramatic shift in the way the music industry operates.

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