Digital Singles Close to Eclipsing Hard Copies

By | November 3, 2003 at 12:00 AM

Digital tracks are outselling physical singles by a growing margin, a sign that consumers increasingly are embracing the brave new world of Internet downloading.

Digital download sales outpaced physical singles 857,000 to 170,000, according to Nielsen SoundScan figures for the week ending Oct. 26. That’s slightly more than a 5-to-1 ratio.

Sean Ryan, VP of music services at RealNetworks, says that the rise of digital track sales carries a “symbolic significance,” illustrating the music industry’s shift to online delivery options.

He also says it indicates a real opportunity for the music business: “Selling individual songs as an offline strategy wasn’t working all that well, but online it can be a huge hit.”

Nielsen SoundScan data indicates that the trend has been evident since mid-August.

In fact, from the last week of June – when Nielsen SoundScan began tracking digital downloads – through the current week, digital tracks have outsold physical singles 7.7 million units to 4 million.

(The former figure could have been higher, but the digital track figures do not include the first two weeks of sales from iTunes for Mac. Apple reported sales of 1.5 million tracks in its first two weeks on the Mac platform.)

Still, the biggest-selling physical single continues to outsell the top digital track. This week’s top commercial single, “I Can Only Imagine” by MercyMe (INO/Curb), sold 6,900 units. Online leader “Hey Ya!” by OutKast (Arista) rang up sales of 4,700.

What all this means for the music business – and whether it signals the start of a comeback for single sales – is open to debate.

EMI Music Marketing executive VP Phil Quartararo says he isn’t reading the tea leaves just yet – echoing a sentiment expressed by many label executives, who say they are not ready to rush to judgment. Quartararo says he is just happy that consumers are seeing a value in music.

“Any way we can drive a consumer to purchase music as opposed to taking music is a win for the industry,” he notes.

But many sales and distribution executives at the majors contend that contrasting digital track sales and physical singles sales isn’t a straight comparison.


The singles market, much to the dismay of physical retailers, has been in a state of pronounced decline for many years. Because major labels have concerns regarding singles’ potential to cannibalize album sales, only a limited number of those titles are available for sale.

Meanwhile, online consumers have access to a universe of more than 500,000 tracks at 99 cents each.

At the very least, some analysts see digital consumption trends as an indicator of growing market acceptance of the nascent online music services.

But a broader view suggests that the trend marks the start of a commercial shift to a market where individual song purchases and digital distribution will play a much bigger role in the industry’s profitability equation.

Regardless of the perspective, label and technology executives say the growth of track sales online shows that the industry is starting to fulfill a consumer demand that previously was being met only by unlicensed, free peer-to-peer networks.

Recent growth in the digital tracks market can be attributed to the rise of PC download sales – particularly from Apple Computer’s iTunes Music Store.

After the debut of iTunes on the PC, which came in the middle of the Nielsen SoundScan reporting period that ended Oct. 19, digital track sales jumped 70% to 685,000 from 406,000 in the previous week.

The gap between physical and digital on individual songs has been narrowing as weekly sales for the most popular digital tracks continue to grow.

On the Billboard Hot Digital Tracks chart this week, each of the 25 tracks ranked were purchased more than 1,000 times – a first. (In all, 32 songs were sold more than 1,000 times last week.)

In another first, two songs on the Hot Digital Tracks chart this week posted sales of more than 4,000 – the aforementioned “Hey Ya!” and “Stacy’s Mom” by Fountains of Wayne (S-Curve/EMC), which sold just shy of 4,100 copies.

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