If digital sales have leveled off, as many believe they have, it might not be because of piracy but instead because consumers have increasingly embraced free, legal music-streaming services like Imeem, MySpace and Pandora.
Teenagers between the ages of 13 and 17 bought 19% less music last year, but 52% of them listened to online radio, up from 34% in 2007, and 46% used social networking sites to download or stream music, up from 26% in 2007, according to a survey by NPD Group. (Downloads from peer-to-peer networks fell 6% in 2008.)
Why the shift? Well, the recession might have something to do with it, since overall entertainment spending by teens dropped by 24%. Or it’s possible the kids just discovered that these sites provide everything iTunes does, except for the ability to listen to music on your iPod, for free.
The record industry’s still getting money for these streams, just not as much as they get from downloads, but those little mechanical and performance royalties add up, particularly for the Web sites that have to pay them, which are having their own financial troubles.
Oh, and as for that theory that streaming music could boost downloads, 54% of teens who heard a song on MySpace said they were likely to return to the site to hear it again. Only one per cent used MySpace’s digital music seller, Amazon, to buy the song. That doesn’t entirely prove people aren’t buying the songs they streamed either eventually or through another retailer, but it does suggest that MySpace may not be able to turn as many streams into downloads as the labels would like.
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